<Nodocse>A7-0202/2012</Nodocse>

2009 - 2014 EUROPEAN PARLIAMENT

Plenary sitting

A7-0202/2012

20.6.2012

***I REPORT

on the proposal for a directive of the European Parliament and of the Council on credit agreements relating to residential property (COM(2011)0142 – C7-0085/2011 – 2011/0062(COD))

Committee on Economic and Monetary Affairs

Rapporteur: Antolín Sánchez Presedo

Rapporteur for the opinion (*):

Kurt Lechner, Committee on the Internal Market and Consumer Protection

(*) Associated committee – Rule 50 of the Rules of Procedure

RR\906034EN.doc PE469.842v03-00

EN United in diversity EN PR_COD_1amCom

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PE469.842v03-00 2/227 RR\906034EN.doc EN CONTENTS

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION...... 5

EXPLANATORY STATEMENT...... 123

OPINION OF THE COMMITTEE ON THE INTERNAL MARKET AND CONSUMER PROTECTION(*)...... 127

OPINION OF THE COMMITTEE ON LEGAL AFFAIRS...... 204

PROCEDURE...... 241

(*) Associated committee – Rule 50.

RR\906034EN.doc 3/227 PE469.842v03-00 EN PE469.842v03-00 4/227 RR\906034EN.doc EN DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION on the proposal for a directive of the European Parliament and of the Council on credit agreements relating to residential property (COM(2011)0142 – C7-0085/2011 – 2011/0062(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2011)0142),

– having regard to Article 294(2) and Article 114(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C7-0085/2011),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the opinion of the European Economic and Social Committee of 14 July 20111,

– having regard to the opinion of the European Central Bank of 18 August 2011,

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the report of the Committee on Economic and Monetary Affairs and the opinions of the Committee on the Internal Market and Consumer Protection and the Committee on Legal Affairs (A7-0202/2012),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Amendment 1

Proposal for a directive Recital 3

1 OJ C 318, 29.10.2011, p. 133.

RR\906034EN.doc 5/227 PE469.842v03-00 EN Text proposed by the Commission Amendment

(3) The financial crisis has shown that (3) The financial crisis has shown that irresponsible behaviour by market irresponsible behaviour by market participants can undermine the foundations participants can undermine the foundations of the financial system, leading to a lack of of the financial system, leading to a lack of confidence among all parties, in particular confidence among all parties, in particular consumers, and potentially severe social consumers, and potentially severe social and economic consequences. Many and economic consequences. Many consumers have lost confidence in the consumers have lost confidence in the financial sector and borrowers have found financial sector and borrowers have found their loans increasingly unaffordable, with their loans increasingly unaffordable, with defaults and forced sales rising. In view of defaults and forced sales rising. As a the problems brought to light in the result, the G20 has commissioned work financial crisis and in the context of from the Financial Stability Board to efforts to ensure an efficient and establish principles on sound competitive internal market, the underwriting standards in relation to Commission has proposed measures with residential immovable property. Although regard to credit agreements relating to some of the greatest problems in the crisis residential immovable property, including occurred outside the Union, consumers in a reliable framework on credit the Union hold significant levels of debt, intermediation, in the context of much of which is concentrated in loans delivering responsible and reliable related to residential immovable property. markets for the future and restoring It is therefore appropriate to ensure that consumer confidence. the Union's regulatory framework in this area is robust, consistent with international principles and makes appropriate use of the range of tools available, including loan-to-value, loan- to-income, debt-to-income and similar ratios. This is important in the context of efforts to ensure an efficient and competitive internal market which ensures financial stability, responsible markets and consumer confidence , in line with the commitment in the Commission's Communication entitled 'Single Market Act: Twelve levers to boost growth and strengthen confidence'1. ______1COM(2011)0206, 13.4.2011.

Amendment 2

PE469.842v03-00 6/227 RR\906034EN.doc EN Text proposed by the Commission Amendment

(4) A series of problems in EU mortgage (4) The Commission identified a series of markets associated with irresponsible problems in mortgage markets within the lending and borrowing at the pre- Union associated with irresponsible contractual stage and the potential scope lending and borrowing and the potential for irresponsible behaviour by credit scope for irresponsible behaviour by intermediaries and non-credit institutions market participants including credit have been identified. Some problems intermediaries and non-credit institutions concerned loans denominated in a foreign have been identified. Some problems currency which consumers had taken out in concerned loans denominated in a foreign that currency to take advantage of the currency which consumers had taken out in interest rate offered but without having an that currency to take advantage of the adequate understanding of the currency interest rate offered but without having risk involved. These problems are driven adequate information about or by market and regulatory failures as well as understanding of the currency risk other factors such as the general economic involved. These problems are driven by climate and low levels of financial literacy. market and regulatory failures as well as Other problems include ineffective, other factors such as the general economic inconsistent, or non-existent registration, climate and low levels of financial literacy. authorisation and supervision regimes for Other problems include ineffective, credit intermediaries and non-credit inconsistent, or non-existent registration, institutions providing credit for residential authorisation and supervision regimes for immovable property. The problems credit intermediaries and non-credit identified have potentially significant institutions providing credit for residential macroeconomic spill-over effects, can lead immovable property. The problems to consumer detriment, act as economic or identified have potentially significant legal barriers to cross-border activity and macroeconomic spill-over effects, can lead create an unlevel playing field between to consumer detriment, act as economic or actors. legal barriers to cross-border activity and create an unlevel playing field between actors.

Amendment 3

Text proposed by the Commission Amendment

(5) In order to facilitate the emergence of a (5) In order to facilitate the emergence of a smoothly functioning internal market with smoothly functioning internal market with a high level of consumer protection in the a high level of consumer protection in the area of credit agreements relating to area of credit agreements relating to residential immovable property, a residential immovable property, an harmonised Union framework needs to be appropriately harmonised Union established in a number of areas. It is framework needs to be established in a further necessary to establish harmonised number of areas, taking account of standards in order to ensure that national and regional differences in the

RR\906034EN.doc 7/227 PE469.842v03-00 EN consumers looking for credit agreements market for residential immovable property relating to residential immovable property and hence for the associated credit and are able to do so confident in the related services. knowledge that the institutions they interact with act in a professional and responsible manner.

Amendment 4

Proposal for a directive Recital 5 a (new)

(5a) This Directive should therefore develop a more transparent, efficient and competitive internal market, through consistent, flexible and fair credit agreements relating to residential immovable property, while promoting sustainable lending and borrowing and financial inclusion and hence providing a high degree of consumer protection. Amendment 5

(6) This Directive should improve (6) This Directive should improve conditions for the establishment and conditions for the establishment and functioning of the internal market through functioning of the internal market through the approximation of Member States' laws the approximation of Member States’ laws and the establishment of quality standards and the establishment of quality standards for certain services, notably with regard to for certain services, notably with regard to the distribution and provision of credit the distribution and provision of credit through creditors and credit intermediaries. through creditors and credit The establishment of quality standards for intermediaries, and the promotion of services for the provision of credit good practices. The establishment of necessarily involves the introduction of quality standards for services for the provisions regarding authorisation and provision of credit necessarily involves the prudential requirements. introduction of provisions regarding authorisation and prudential requirements.

PE469.842v03-00 8/227 RR\906034EN.doc EN Amendment 6

(7) For those areas not covered by this (7) For those areas not covered by this Directive, Member States should be free to Directive, Member States should be free to maintain or introduce national legislation. maintain or introduce national legislation. Member States should be able to maintain In particular, Member States should be or introduce national provisions in areas able to maintain or introduce national such as contract law relating to the validity provisions in areas such as contract law of credit agreements, property valuation, relating to the validity of credit land registration, contractual information, agreements, property law, land registration, post-contractual issues, and handling contractual information, and post- defaults. contractual issues not regulated here.

Amendment 7

(8) As consumers and enterprises are not in (8) As consumers and enterprises are not in the same position, they do not need the the same position, they do not need the same level of protection. While it is same level of protection. While it is important to guarantee consumers' rights important to guarantee consumers’ rights by provisions that cannot be derogated by provisions that cannot be derogated from by contract, it is reasonable to let from by contract, it is reasonable to let enterprises and organisations engage in enterprises and organisations engage in other agreements. This Directive should other agreements. therefore apply to credit granted to consumers. Member States should, however, have the possibility to extend the scope to natural or legal persons that are not consumers, notably micro-enterprises, as defined by Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises.

Amendment 8

(10) This Directive should not apply to (10) This Directive should not apply to certain credit agreements that will certain credit agreements where the eventually be repaid from the sale creditor contributes a lump sum, periodic proceeds of an immovable property and payments or other forms of credit whose primary objective is to facilitate disbursement in return for a sum deriving consumption, such as equity release from the sale of a residential immovable products or other equivalent specialised property and whose primary objective is to products. Such credit agreements have facilitate consumption, such as equity specific characteristics which are beyond release products or other equivalent the scope of this Directive. An assessment specialised products. Such credit of the borrower's creditworthiness, for agreements have specific characteristics example, is irrelevant since the payments which are beyond the scope of this are made from the creditor to the borrower Directive. An assessment of the borrower’s rather than the other way round. Such a creditworthiness, for example, is irrelevant transaction would also require, amongst since the payments are made from the other things, substantially different pre- creditor to the borrower rather than the contractual information. Furthermore, other other way round. Such a transaction would products, such as home reversions, which also require, amongst other things, have comparable functions to reverse substantially different pre-contractual mortgages or lifetime mortgages do not information. Furthermore, other products, involve the provision of credit and so such as home reversions, which have would remain outside the scope of this comparable functions to reverse mortgages Directive. However this Directive should or lifetime mortgages do not involve the apply to those secured loans whose provision of credit and so would remain primary objective is to facilitate the outside the scope of this Directive. purchase of an immovable property, However this Directive should apply to including those loans that do not require those secured loans whose primary the reimbursement of the capital or those objective is to facilitate the purchase of whose purpose is to provide temporary an immovable property, including those financing between the sale of one loans that do not require the reimbursement immovable property and the purchase of of the capital or those whose purpose is to another. provide temporary financing between the sale of one immovable property and the purchase of another.

Amendment 9

Proposal for a directive Recital 10a (new)

(10a) It is also appropriate to allow Member States under certain conditions to exclude certain other credit agreements, such as those which are granted to a restricted public on

PE469.842v03-00 10/227 RR\906034EN.doc EN advantageous terms or which are provided by credit unions, in order to provide an appropriate balance between the needs of financial stability and the single market on one hand and financial inclusion and access to credit on the other.

Amendment 10

(11) For reasons of legal certainty, the (11) For reasons of legal certainty, the Union framework in the area of credit Union framework in the area of credit agreements relating to residential agreements relating to residential immovable property should be consistent immovable property should be consistent with and complementary to other Union with and complementary to other Union acts, particularly in the areas of consumer acts, particularly in the areas of consumer protection and prudential supervision. protection and prudential supervision. Essential definitions of terms such as Certain essential definitions should be in ‘consumer’, ‘creditor’, ‘credit line with those in Directive 2008/48/EC so intermediary’, ‘credit agreements’ and that the same terminology refers to the ‘durable medium’ as well as key concepts same type of facts irrespective of whether used in standard information to designate the credit is a consumer credit or a credit the financial characteristics of the credit, relating to residential immovable property. such as the total cost of the credit to the Member States should therefore ensure in consumer, the total amount payable by the transposition of this Directive that there the consumer, the annual percentage rate is an appropriate consistency of of charge and the borrowing rate, should application and interpretation. be in line with those in Directive 2008/48/EC so that the same terminology refers to the same type of facts irrespective of whether the credit is a consumer credit or a credit relating to residential immovable property. Member States should therefore ensure in the transposition of this Directive that there is a consistency of application and interpretation.

Amendment 11

11a. The definition of a 'credit

RR\906034EN.doc 11/227 PE469.842v03-00 EN intermediary' should not cover the mere referral of a consumer to a credit intermediary or creditor, if the person does not otherwise carry out the activities listed in the definition.

Amendment 12

(12) In order to ensure a consistent (12) In order to ensure a consistent framework for consumers in the area of framework for consumers in the area of credit as well as to minimise the credit as well as to minimise the administrative burden for creditors and administrative burden for creditors and credit intermediaries, the core framework credit intermediaries, the core framework of this Directive should follow the of this Directive should follow the structure of Directive 2008/48/EC, notably structure of Directive 2008/48/EC as far the notions that information included in as possible, notably the notions that advertising concerning credit agreements information included in advertising relating to residential immovable property concerning credit agreements relating to should be provided to the consumer by residential immovable property should be means of a representative example, that provided to the consumer by means of a detailed pre-contractual information should representative example, that detailed pre- be given to him by means of a standardised contractual information should be given to information sheet, that the consumer him by means of a standardised should receive adequate explanations information sheet, that the consumer before the conclusion of the credit should receive adequate explanations agreement and that creditors should assess before the conclusion of the credit the consumer's creditworthiness before the agreement, that the basis for calculating provision of a loan. Similarly, non- the cost of credit should be harmonised discriminatory access for creditors to and should exclude notary fees, and that relevant credit databases should also be creditors should assess the consumer’s ensured in order to achieve a level playing creditworthiness before the provision of a field with the provisions as guaranteed by loan. Similarly, non-discriminatory access Directive 2008/48/EC. Similarly to for creditors to relevant credit databases Directive 2008/48/EC, this Directive should also be ensured in order to achieve should ensure the appropriate a level playing field with the provisions as authorisation, registration and supervision guaranteed by Directive 2008/48/EC. of all creditors providing credit agreements Similarly to Directive 2008/48/EC, this relating to residential immovable property Directive should ensure the appropriate and should introduce requirements for the authorisation, registration and supervision establishment of, and access to, out-of- of all creditors providing credit agreements court dispute resolution mechanisms. relating to residential immovable property and should introduce requirements for the establishment of, and access to, out-of- court dispute resolution mechanisms.

(13) This Directive should supplement (13) This Directive should supplement Directive 2002/65/EC of the European Directive 2002/65/EC of the European Parliament and of the Council of 23 Parliament and of the Council of 23 September 2002 concerning the distance September 2002 concerning the distance marketing of consumer financial services marketing of consumer financial services and amending Council Directive and amending Council Directive 90/619/EEC and Directives 97/7/EC and 90/619/EEC and Directives 97/7/EC and 98/27/EC which requires that the consumer 98/27/EC which requires that in distance be informed of the existence or absence of sales a consumer be informed of the a right of withdrawal and foresees a right existence or absence of a right of of withdrawal. However, while Directive withdrawal and foresees a right of 2002/65/EC foresees the possibility for the withdrawal. However, while Directive supplier to communicate pre-contractual 2002/65/EC foresees the possibility for the information after the conclusion of the supplier to communicate pre-contractual contract, this would be inappropriate for information after the conclusion of the contracts for credit agreements relating to contract, this would be inappropriate for residential immovable property given the contracts for credit agreements relating to significance of the financial commitment residential immovable property given the for the consumer. Furthermore, as foreseen significance of the financial commitment in Directive 85/577/EEC of 20 December for the consumer. Furthermore, in addition 1985 to protect the consumer in respect of to their rights under this Directive, as contracts negotiated away from business foreseen in Directive 85/577/EEC of 20 premises (Doorstep Selling Directive), December 1985 to protect the consumer in consumers should have a right of respect of contracts negotiated away from withdrawal for credit agreements relating business premises (Doorstep Selling to residential immovable property Directive), consumers should have a right concluded off-premises and should be of withdrawal for credit agreements informed about the existence of that right. relating to residential immovable property concluded off-premises and should be informed about the existence of that right.

Amendment 14

(14) At the same time, it is important take (14) At the same time, it is important to into consideration the specificities of credit take into consideration the specificities of agreements relating to residential credit agreements relating to residential immovable property which justify a immovable property which justify a differentiated approach. Given the nature differentiated approach. Given the nature

RR\906034EN.doc 13/227 PE469.842v03-00 EN and the possible consequences of a credit and the possible consequences of a credit agreement relating to residential agreement relating to residential immovable property for the consumer, immovable property for the consumer, advertising materials and personalised pre- advertising materials and personalised pre- contractual information should include contractual information should include specific risk warnings, for instance about adequate specific risk warnings, for the nature and implications of taking out a instance about the nature and implications security. Following what already existed as of taking out a security. Following what a voluntary approach by the industry already existed as a voluntary approach by concerning home loans, general pre- the industry concerning home loans, contractual information should be made general pre-contractual information should available at all times in addition to the be made available at all times in addition to personalised pre-contractual information. the personalised pre-contractual Furthermore, a differentiated approach is information. Furthermore, a differentiated justifiable in order to take into approach is justifiable in order to take into consideration the lessons learnt from the consideration the lessons learnt from the financial crisis in order to ensure that loan financial crisis in order to ensure that loan origination takes place in a sound manner. origination takes place in a sound manner. In this respect, the provisions on the In this respect, the provisions on the creditworthiness assessment should be creditworthiness assessment should be strengthened in comparison to consumer strengthened in comparison to consumer credit, more precise information should be credit, more precise information should be provided by credit intermediaries on their provided by credit intermediaries on their status and relationship with the creditors in status and relationship with the creditors in order to disclose potential conflicts of order to disclose potential conflicts of interest, and all actors involved in the interest, and all actors involved in the origination of credit agreements relating to origination of credit agreements relating to residential immovable property should be residential immovable property should be adequately authorised, registered and adequately authorised, registered and supervised. supervised.

Amendment 15

(14a) It is also necessary to regulate some additional areas to reflect the specificity of loans related to residential immovable property. Given the significance of the transaction it is necessary to ensure that consumers have adequate time for reflection before committing themselves to taking out a loan. It is also important to prevent practices which may induce consumers to enter into a credit agreement which is not in their best interests, such as tying of certain

PE469.842v03-00 14/227 RR\906034EN.doc EN products, without restricting product bundling which can benefit consumers. It is also important to ensure that the residential immovable property is appropriately valued before the conclusion of the credit agreement and, where the valuation affects the residual obligation of the consumer, on default. It is also appropriate to regulate the handling of arrears and defaults. Member States should be permitted to maintain or introduce requirements in relation to the process to be followed in relation to arrears and foreclosure or the options which must be pursued prior to initiating foreclosure proceedings in relation to a property situated in their territory.

Amendment 16

(15) Intermediaries often engage in more (15) Intermediaries often engage in more activities that just credit intermediation, in activities that just credit intermediation, in particular insurance intermediation or particular insurance intermediation or investment services provision. This investment services provision. This Directive should therefore also ensure a Directive should therefore also ensure a degree of coherence with Directive degree of coherence with Directive 2002/92/EC of the European Parliament 2002/92/EC of the European Parliament and of the Council of 9 December 2002 on and of the Council of 9 December 2002 on insurance mediation and Directive insurance mediation and Directive 2004/39/EC of the European Parliament 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on and of the Council of 21 April 2004 on markets in financial instruments amending markets in financial instruments amending Council Directives 85/611/EEC and Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council European Parliament and of the Council and repealing Council Directive and repealing Council Directive 93/22/EEC. In particular, prudential 93/22/EEC. In particular, credit requirements for intermediaries should be institutions and insurance intermediaries broadly in line with Directive 2002/92/EC should not require a separate in order to simplify the process of authorisation to operate as a credit establishing as a credit intermediary and intermediary in order to simplify the operating cross-border. process of establishing as a credit intermediary and operating cross-border.

RR\906034EN.doc 15/227 PE469.842v03-00 EN

Amendment 17

(15a) In order to increase the ability of consumers to make informed decisions for themselves about borrowing and managing debt responsibly, Member States should work with stakeholders to facilitate and promote the education of consumers in those areas. Member States should in particular ensure that assistance is available for vulnerable and less experienced consumers, such as first- time buyers.

Amendment 18

(16) The applicable legal framework (16) The applicable legal framework should give consumers the confidence that should give consumers the confidence that creditors and credit intermediaries are creditors and credit intermediaries are acting in the best interests of the consumer. acting in the interests of the consumer. A A key aspect of ensuring such consumer key aspect of ensuring such consumer confidence is the requirement to ensure a confidence is the requirement to ensure a high degree of fairness, honesty and high degree of fairness, honesty and professionalism in the industry. While this professionalism in the industry, Directive should require relevant appropriate management of conflicts of knowledge and competence to be proven at interest including those arising from the level of the institution, Member States remuneration, and to require advice to be should be free to introduce or maintain given in the best interests of the such requirements applicable to individual consumer. While this Directive should natural persons. require relevant knowledge and competence to be proven at the level of the institution, Member States should be free to introduce or maintain such requirements applicable to individual natural persons.

(17) Creditors and credit intermediaries (17) Creditors and credit intermediaries frequently use advertisements, often frequently use advertisements, often featuring special terms and conditions, to featuring special terms and conditions, to attract consumers to a particular product. attract consumers to a particular product. Consumers should, therefore, be protected Consumers should, therefore, be protected against unfair or misleading advertising against unfair or misleading advertising practices and should be able to compare practices and should be able to compare advertisements. Specific provisions on the advertisements. Specific final provisions advertising of credit agreements relating to on the advertising of credit agreements residential immovable property and a list relating to residential immovable property of items to be included in advertisements and credit agreements secured by and marketing materials directed at mortgages, and a list of items to be consumers are necessary to enable them to included in advertisements and marketing compare different offers. Such provisions materials directed at consumers where take into account the specificities of credit such advertising specifies interest rates agreements relating to residential and costs, are necessary to enable them to immovable property, for instance, the fact compare different offers. Except for those that if the loan repayments are not met, specific final provisions, Member States there is a risk of the consumer losing the should remain free to provide for property. Member States should remain information requirements in their free to introduce or maintain disclosure national laws. Such provisions should take requirements in their national laws into account the specificities of credit regarding advertising which does not agreements relating to residential contain information on the cost of credit. immovable property.

Amendment 20

Advertising tends to focus on one or Advertising tends to focus on one or several products in particular, while several products in particular, while consumers should be able to make their consumers should be able to make their decisions in full knowledge of the range of decisions in full knowledge of the range of credit products on offer. In this respect, credit products on offer. In this respect, general information plays an important role general information plays an important role in educating the consumer in the broad in educating the consumer in the broad range of products and services available range of products and services available from a particular creditor or credit from a particular creditor or credit intermediary and the key features thereof. intermediary and the key features thereof.

RR\906034EN.doc 17/227 PE469.842v03-00 EN Consumers should therefore be able at all Consumers should therefore be able at all times to access general information on the times to access general information on the credit products available. They should credit products available. further receive personalised information in good time prior to the conclusion of the credit agreement in order to enable them to compare and reflect on the characteristics of credit products.

Amendment 21

(18a) Consumers should further receive personalised information in good time prior to the conclusion of the credit agreement in order to enable them to compare and reflect on the characteristics of credit products. In accordance with the Commission Recommendation 2001/193/EC on pre-contractual information to be given to consumers by lenders offering home loans1, the Commission monitored the European Standardised Information Sheet (ESIS) which provides information, personalised for the borrower, on the credit agreement being provided. Evidence collected by the Commission highlighted the need to revise the content and presentation of the ESIS to ensure that it is clear, understandable and contains all information found to be relevant for consumers. The content and layout of the ESIS should incorporate the necessary improvements identified during consumer testing in all Member States. The structure of the sheet, in particular, the order of the information items, should be revised, the wording should be more user- friendly, while sections, such as 'nominal rate' and 'annual percentage rate of charge', should be merged and new sections, such as 'risks and warnings', should be added. ______

PE469.842v03-00 18/227 RR\906034EN.doc EN 1 OJ L 69, 10.3.2001, p. 25.

Amendment 22

Proposal for a directive Recital 18 b (new)

(18b) In order to allow the consumer to compare an offer with other offers, obtain third party advice if necessary, assess its implications and take an informed decision on whether to accept the offer regardless of the means of conclusion of the contract, it is necessary to provide for a minimum period of reflection for consumers. Where consumers conclude a credit agreement before the end of the reflection period a right of withdrawal should be provided. However, in order to accommodate the specificities of property transactions in Member States and the potential close link between the credit agreement and an associated property transaction, Member States should be able to provide that the right of withdrawal ceases to apply where the consumer undertakes any action, whether through a notary or otherwise, which under national law results in the transfer of a right in a property connected to or using funds obtained under the credit agreement.

Amendment 23

(20) The Commission Recommendation deleted 2001/193/EC on pre-contractual information to be given to consumers by lenders offering home loans endorsed the Voluntary Code agreed in 2001 between associations and federations representing lenders and consumers and which contains a European Standardised

RR\906034EN.doc 19/227 PE469.842v03-00 EN Information Sheet (ESIS). This provides information, personalised for the borrower, on the credit agreement being provided. In its Recommendation, the Commission committed to monitoring compliance with the Code as well as its effectiveness, and to consider presenting binding legislation should the terms of the Recommendation not be fully complied with. Evidence collected by the Commission has since highlighted the need to revise the content and presentation of the ESIS to ensure that it is clear, understandable and contains all information found to be relevant for consumers. The content and layout of the ESIS should incorporate the necessary improvements identified during consumer testing in all Member States. The structure of the sheet (in particular, the order of the information items) should be revised, the wording should be more user- friendly, while sections, such as 'nominal rate' and 'annual percentage rate of charge', should be merged and new sections, such as 'external complaint body' and 'risks and warnings', should be added.

Amendment 24

(22) The consumer may still need (22) The consumer may still need additional assistance in order to decide additional assistance in order to decide which credit agreement, within the range of which credit agreement, within the range of products proposed, is the most appropriate products proposed, is the most appropriate for his needs and financial situation. for his needs and financial situation. Creditors, and where the transaction is Creditors, and where the transaction is through a credit intermediary, credit through a credit intermediary, credit intermediaries should provide such intermediaries should provide assistance in assistance in relation to the credit products relation to the credit products which they which they offer to the consumer. The offer to the consumer by explaining the relevant information, as well as the relevant information including the essential characteristics of the products essential characteristics of the products proposed, should therefore be explained to proposed to the consumer in a personalised the consumer in a personalised manner so manner so that the consumer can

PE469.842v03-00 20/227 RR\906034EN.doc EN that the consumer can understand the understand the effects which they may effects which they may have on his have on his economic situation. Member economic situation. Member States could States could determine when and to what determine when and to what extent such extent such explanations are to be given to explanations are to be given to the the consumer, taking into account the consumer, taking into account the particular circumstances in which the credit particular circumstances in which the credit is offered, the consumer’s need for is offered, the consumer's need for assistance and the nature of individual assistance and the nature of individual credit products. Such explanation and credit products. provision of personalised information should not necessarily constitute a personal recommendation.

Amendment 25

(23) In order to promote the establishment (23) In order to promote the establishment and functioning of the internal market and and functioning of the internal market and to ensure a high degree of protection for to ensure a high degree of protection for consumers throughout the Union, it is consumers throughout the Union, it is necessary to ensure the comparability of necessary to uniformly ensure the information relating to annual percentage comparability of information relating to rates of charge throughout the Union. The annual percentage rates of charge total cost of the credit to the consumer throughout the Union. The total cost of the should comprise all the costs that the credit to the consumer should comprise all consumer has to pay in connection with the the costs that the consumer has to pay in credit agreement, except for notarial costs. connection with the credit agreement, It should therefore include interest, except for registration fees and notarial commissions, taxes, fees for credit costs. It should therefore include interest, intermediaries and any other fees as well as commissions, taxes, fees for credit the cost of insurance or other ancillary intermediaries and any other fees as well as products, where these are obligatory in the cost of insurance the valuation of the order to obtain the credit on the terms and property or other ancillary products, where conditions marketed. As the annual these are obligatory in order to obtain the percentage rate of charge can at the pre- credit on the terms and conditions contractual stage be indicated only through marketed. As the annual percentage rate of an example, such an example should be charge can at the pre-contractual stage be representative. Therefore, it should indicated only through an example, such an correspond, for instance, to the average example should be representative. duration and total amount of credit granted Therefore, it should correspond, for for the type of credit agreement under instance, to the average duration and total consideration. Given the complexities of amount of credit granted for the type of calculating an annual percentage rate of credit agreement under consideration. charge (for instance, for credits based on Given the complexities of calculating an variable interest rates or non-standard annual percentage rate of charge (for amortisation) and in order to be able to instance, for credits based on variable

RR\906034EN.doc 21/227 PE469.842v03-00 EN accommodate product innovation, interest rates or non-standard amortisation) technical regulatory standards could be and in order to be able to accommodate employed to amend or specify the method product innovation, delegated acts could of calculation of the annual percentage be used to amend the remarks or update rate of charge. The definition of and the assumptions. The definition of and methodology used for calculating the methodology used for calculating the annual percentage rate of charge in this annual percentage rate of charge in this Directive should be the same as those in Directive should be as close as possible to Directive 2008/48/EC in order to facilitate those in Directive 2008/48/EC in order to consumer understanding and comparison. facilitate consumer understanding and Those definitions and methodologies may, comparison. Those definitions and however, differ in the future should methodologies may, however, differ in the Directive 2008/48/EC be modified at a future should Directive 2008/48/EC be later date. Member States are free to modified at a later date. Member States are maintain or introduce prohibitions on free to maintain or introduce prohibitions unilateral changes to the borrowing rate by on unilateral changes to the borrowing rate the creditor. by the creditor.

Amendment 26

(24) An assessment of creditworthiness (24) It is essential that the consumer's should take into consideration all ability and propensity to repay the credit necessary factors that could influence a is assessed and verified before a credit consumer's ability to repay over the agreement is concluded. The assessment lifetime of the loan including, but not of creditworthiness should take into limited to, the consumer's income, consideration all relevant factors over the regular expenditures, credit score, past lifetime of the loan. In particular, the credit history, ability to handle interest consumer's ability to service and fully rate adjustments, and other existing credit repay the loan should include commitments. Additional provisions may consideration of future payments needed be necessary to further elaborate on the due to negative amortisation or deferred different elements that may be taken into payments of principal or interest, should consideration in a creditworthiness not assume any appreciation in value assessment. Member States may issue unless the purpose of the credit guidance on the method and criteria to agreement is to construct or renovate the assess a consumer's creditworthiness, for immovable property and should be example by setting limits on loan-to-value considered in the light of other or loan-to-income ratios. expenditure and debts as well as savings and assets. Reasonable allowances should also be made for future events, such as a reduction in income where the loan term lasts into retirement or, where applicable, an increase in the interest rate or negative change to the exchange rate. Member States may issue additional

PE469.842v03-00 22/227 RR\906034EN.doc EN guidance on those or additional criteria and on methods to assess a consumer’s creditworthiness, for example by setting limits on loan-to-value or loan-to-income ratios. The creditor's decision as to whether to grant the credit should be consistent with the outcome of the creditworthiness assessment. However, a positive creditworthiness assessment should not constitute an obligation for the creditor to provide credit.

Amendment 27

(25) A negative creditworthiness deleted assessment should indicate to the creditor that the consumer is unable to afford the credit and as a consequence, the creditor should not grant the credit. Such a negative outcome may derive from a wide range of reasons, including but not limited to the consultation of a database or a negative credit score. A positive creditworthiness assessment should not constitute an obligation for the creditor to provide credit.

Amendment 28

(26) Consumers should provide all (26) In line with the recommendations of available relevant information on their the Financial Stability Board, creditors financial situation and personal should require consumers to provide circumstances to the creditor or relevant information on their income and intermediary in order to facilitate the financial situation in order to facilitate the creditworthiness assessment. The creditworthiness assessment, since failure consumer should not, however, be to do so will result in refusal of the credit penalised where he is not in a position to they seek to obtain and the creditor provide certain information or should appropriately verify such assessments of the future evolution of his information before granting the loan. In financial situation. In situations where situations where consumers knowingly

RR\906034EN.doc 23/227 PE469.842v03-00 EN consumers knowingly provide incomplete provide incomplete or inaccurate or inaccurate information, Member States information, Member States should be able should be able to determine the appropriate to determine the appropriate penalties. penalties.

Amendment 29

(26a) The Financial Stability Board has established principles to ensure that residential immovable property is appropriately valued. Member States should ensure that creditors value properties in accordance with those principles or other internationally accepted standards and that a register exists of professionally competent appraisers. It should be possible for that register to be operated by an appropriate professional association.

Amendment 30

(27) Consultation of a credit database is a (27) Consultation of a credit database is a useful element in the assessment of useful element in the assessment of creditworthiness. Some Member States creditworthiness. Some Member States require creditors to assess the require creditors to assess the creditworthiness of consumers on the basis creditworthiness of consumers on the basis of a consultation of the relevant database. of a consultation of the relevant database. Creditors should also be able to consult the Creditors should also be able to consult the credit database over the lifetime of the loan credit database over the lifetime of the loan in order to identify and assess the potential in order to identify and assess the potential for default. In the event that such a for default. Pursuant to Directive 95/46/EC potential is evident or objectively of the European Parliament and of the demonstrated, the creditor should contact Council of 24 October 1995 on the the consumer to discuss the different protection of individuals with regard to the options to avoid the possibility of default, processing of personal data and on the free such as a rescheduling of the loan. In any movement of such data, consumers should event, the creditor should not consider be informed by creditors of the withdrawing the credit without having consultation of the credit database prior to first explored all possible alternatives with its consultation, and should have the right

PE469.842v03-00 24/227 RR\906034EN.doc EN the consumer to avoid default. Pursuant to to access the information held on them in Directive 95/46/EC of the European such a credit database in order to, where Parliament and of the Council of 24 necessary, rectify, erase or block the October 1995 on the protection of personal data concerning them processed individuals with regard to the processing of therein where it is inaccurate or has been personal data and on the free movement of unlawfully processed. such data, consumers should be informed by creditors of the consultation of the credit database prior to its consultation, and should have the right to access the information held on them in such a credit database in order to, where necessary, rectify, erase or block the personal data concerning them processed therein where it is inaccurate or has been unlawfully processed.

Amendment 31

(28) To prevent any distortion of deleted competition among creditors, it should be ensured that all creditors (including credit institutions or non-credit institutions providing credit agreements relating to residential immovable property) have access to all public and private credit databases concerning consumers under non-discriminatory conditions. Such conditions should not therefore include a requirement to be established as a credit institution. Access conditions, such as the costs of access or requirements for any request for information to be based upon a request for credit would continue to apply. Member States are free to determine whether, within their jurisdictions, credit intermediaries may also have access to such databases.

Amendment 32

(29) Where a decision to reject an (29) Where a decision to reject an application for credit is based on data application for credit is based on data obtained through the consultation of a obtained through the consultation of a database or the lack of data therein, the database or the lack of data therein, the creditor should inform the consumer creditor should inform the consumer thereof, of the name of the database thereof, of the name of the database consulted and of any other elements consulted and of any other elements required by Directive 95/46/EC so as to required by Directive 95/46/EC so as to enable the consumer to exercise his right to enable the consumer to exercise his right to access and, where necessary, rectify, erase access and, where necessary, rectify, erase or block personal data concerning him and or block personal data concerning him and processed therein. Where a decision to processed therein. However, the creditor reject an application for credit is based on should not be required to give such an automated decision or on systematic information when to do so would be methods such as credit scoring systems, prohibited by other Union legislation such the creditor should inform the consumer as legislation on money laundering or the thereof and explain the logic involved in financing of terrorism. Neither should such the decision and of the arrangements information be provided where to do so enabling the consumer to request the would be contrary to the objectives of automated decision to be reviewed public policy or public security such as the manually. However, the creditor should prevention, investigation, detection or not be required to give such information prosecution of criminal offences. when to do so would be prohibited by other Union legislation such as legislation on money laundering or the financing of terrorism. Neither should such information be provided where to do so would be contrary to the objectives of public policy or public security such as the prevention, investigation, detection or prosecution of criminal offences.

Amendment 33

(30a) To prevent any distortion of competition among creditors, it should be ensured that all creditors, including credit institutions or non-credit institutions providing credit agreements relating to residential immovable property, have access to all public and private credit databases concerning consumers under

PE469.842v03-00 26/227 RR\906034EN.doc EN non-discriminatory conditions. Such conditions should not therefore include a requirement to be established as a credit institution. Access conditions, such as the costs of access or requirements for any request for information to be based upon a request for credit would continue to apply. Member States should be free to determine whether, within their jurisdictions, credit intermediaries may also have access to such databases.

Amendment 34

(31) In order to be in a position to (31) Providing advice in the form of a understand the nature of the service, personalised recommendation is a distinct consumers should be made aware of what activity which may but need not be constitutes a personalised combined with other aspects of granting recommendation on suitable credit or intermediating credit. In order to be in a agreements for that consumer's needs position to understand the nature of the and financial situation (‘advice’) and service, consumers should be made aware when it is being provided and when it is of when advice is being provided and when not. Those providing advice should comply it is not. Those providing advice should with general standards in order to ensure comply with certain standards in order to that the consumer is presented with a ensure that the consumer is presented with range of products suitable for his needs products suitable for his needs and and circumstances. That service should be circumstances. Advisers should also based on a fair and sufficiently wide- disclose whether they are advising on a ranging analysis of the products available wide range of products from across the on the market, and on a close inspection market or only on the creditor's or credit of the consumer's financial situation, intermediary's own product range. preferences and objectives. Such an Advisers should be able to specialise in assessment should be based on up-to-date certain 'niche' products such as bridging information and reasonable assumptions finance and advise on a wide range of on the consumer's circumstances during products within that specialist niche the lifetime of the loan. Member States provided that is made clear to the may clarify how the suitability of a given consumer. Where advice is given it should product for a consumer should be assessed be based on an understanding of the in the context of the provision of advice. consumer's financial situation, preferences and objectives based on up-to-date information and reasonable assumptions about the consumer's circumstances during the lifetime of the loan. Member States may clarify how the suitability of a given product for a consumer should be

RR\906034EN.doc 27/227 PE469.842v03-00 EN assessed in the context of the provision of advisory services.

Amendment 35

(32) A consumer's ability to repay his (32) In line with the recommendations of credit prior to the expiry of his credit the Financial Stability Board, given the agreement may play an important role in long term nature of many loans related to promoting competition in the single residential property, some flexibility market and the free movement of EU during the lifetime of the credit citizens. However, substantial differences agreement is needed to enable both exist between the national principles and creditors and consumers to manage risks conditions under which consumers have and changing circumstances to which the ability to repay and the conditions they are exposed during the loan. It is under which such early repayment can therefore appropriate that consumers take place. Whilst recognising the should have a right to fully or partially diversity in mortgage funding repay the credit agreement early as this mechanisms and the range of products encourages responsible borrowing and available, certain standards with regard hence financial stability as well as to early repayment of credit are essential competition in the single market. at Union level in order to ensure that However, creditors should be entitled to consumers have the possibility to fair and objectively justified compensation discharge their obligations before the date for the costs directly linked to the early agreed in the credit agreement and the repayment, taking into account also any confidence to shop around for the best savings thereby made by the creditor. products to meet their needs. Member Such compensation may be recovered in States should therefore ensure, either by the form of a specific charge to cover legislation or by means of contractual possible costs for consumers who exercise clauses, that consumers have a statutory the right to repay early or it may be or contractual right to early repayment; recovered by absorbing the cost into the nevertheless, Member States should be total cost of the credit agreement. able to define the conditions for the Member States should be able to ensure exercise of such a right. These conditions that justified costs do not exceed a level may include time limitations on the compatible with market efficiency. Where exercise of the right, different treatment the early repayment falls within a period depending on the type of the borrowing for which the borrowing rate is fixed, rate, whether fixed or variable, exercise of the right may be made subject restrictions with regard to the to the existence of a special interest on the circumstances under which the right may part of the consumer specified by the be exercised. Member States could also Member State. Such special interest may provide that the creditor should be entitled for example occur in case of divorce or to fair and objectively justified unemployment. Where a Member State compensation for potential costs directly chooses to lay down such conditions, these linked to early repayment of the credit. In should not make the exercise of the right any event if the early repayment falls excessively difficult or onerous for the

PE469.842v03-00 28/227 RR\906034EN.doc EN within a period for which the borrowing consumer. It is also therefore appropriate rate is fixed, exercise of the right may be to make provision for flexibility under made subject to the existence of a special certain conditions where credit interest on the part of the consumer. Such agreements are denominated in a foreign special interest may for example occur in currency, provided that the creditor is case of divorce or unemployment. Where a again entitled to fair and objectively Member State chooses to lay down such justified compensation for possible costs conditions, these should not make the directly linked to the exercise by exercise of the right excessively difficult or consumers of the rights provided by the onerous for the consumer. Directive.

Amendment 36

(32a) It is also important to ensure that sufficient transparency exists to provide clarity on the nature of the commitments made in the interests of preserving financial stability. Member States should therefore develop frameworks to allow for flexibility, for example by accepting another property as equivalent collateral for the loan. Those measures should enable creditors to accept as equivalent collateral property located in another Member State where it is considered as equivalent for the purposes of being pooled in financial instruments traded in secondary markets.

Amendment 37

(34) Credit intermediaries should be (34) Credit intermediaries should be registered with the competent authority of authorised and supervised to ensure that the Member State where they have their they meet strict professional requirements residence or their head office, provided in relation to their competence, good that they have been authorised in repute, and professional indemnity cover. accordance with strict professional Authorised credit intermediaries should requirements in relation to their also be registered. Such requirements competence, good repute, and professional should apply at least at the level of the

RR\906034EN.doc 29/227 PE469.842v03-00 EN indemnity cover. With a view to institution; however, Member States may promoting consumer confidence in credit clarify whether such requirements for intermediaries, Member States should authorisation and subsequent registration ensure that authorised credit apply to individual employees within the intermediaries are subject to ongoing and credit intermediary. It is also appropriate thorough supervision by their home to allow credit intermediaries to appoint Member State competent authority. Such representatives to act on their behalf and requirements should apply at least at the under their responsibility and for the level of the institution; however, Member minimum regulatory requirements for States may clarify whether such such appointed representatives to be requirements for authorisation and established in this Directive. subsequent registration apply to individual employees within the credit intermediary.

Amendment 38

(35a) In order to facilitate the ability of credit intermediaries to provide their services on a cross-border basis, for the purposes of cooperation, information exchange and dispute resolution between competent authorities, the competent authorities responsible for the authorisation and supervision of credit intermediaries should be those acting under the auspices of the EBA, as set out in Article 4(2) of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority) or other national authorities which are required to cooperate with such competent authorities.

Amendment 39

(39) In order to take account of (39) In order to ensure consistent developments in the markets for credit harmonisation and to take account of relating to residential immovable property developments in the markets for credit or in the evolution of credit products as relating to residential immovable property well as economic developments, such as or in the evolution of credit products or in inflation, and in order to provide further economic conditions, the power to adopt explanations on how to address certain of delegated acts in accordance with the requirements contained in this Article 290 of the Treaty on the Directive, the Commission should be Functioning of the European Union empowered to adopt delegated acts in should be delegated to the Commission. In accordance with Article 290 of the Treaty particular, the Commission should be on the Functioning of the European empowered to adopt delegated acts to Union. In particular, the Commission supplement and update the content and should be empowered to adopt delegated presentation of the ESIS and to amend acts to specify the details concerning the the remarks or update the assumptions professional requirements applicable to used to calculate the APRC. It is of creditors' staff and credit intermediaries, particular importance that the the criteria used for assessing the Commission carry out appropriate creditworthiness of the consumer and in consultations during its preparatory work, ensuring that credit products are not including at expert level. The unsuitable for the consumer, and further Commission, when preparing and harmonisation of key terms such as drawing up delegated acts, should ensure ‘default’ the registration criteria and data a simultaneous, timely and appropriate processing conditions to be applied to transmission of relevant documents to the credit databases. European Parliament and Council.

Amendment 40

(40) In order to take account of deleted developments in the markets for credit relating to residential immovable property, including the range of products available, the Commission should be empowered to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the European Union to amend the content of the standard information items to be included in advertising, the content and format of the European Standardised Information Sheet (ESIS), the content of the information disclosures by credit

RR\906034EN.doc 31/227 PE469.842v03-00 EN intermediaries, the formula and the assumptions used to calculate the annual percentage rate of charge and the criteria to be taken into account for the assessment of the consumer's creditworthiness.

Amendment 41

(41) In order to take account of economic deleted developments, such as inflation and developments in markets for credit agreements related to residential immovable property, the Commission should be empowered to stipulate the minimum monetary amount of the professional indemnity insurance or comparable guarantee with regard to credit intermediaries by adopting regulatory technical standards.

Amendment 42

(42) In order to facilitate the ability of deleted credit intermediaries to provide their services on a cross-border basis, for purposes of cooperation, information exchange and dispute resolution between competent authorities, the competent authorities responsible for the authorisation and supervision of credit intermediaries should be those acting under the auspices of the EBA, as set out in Article 4(2) of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority).

(43) The European Parliament and the (43) The European Parliament and the Council should have two months from the Council should have three months from date of notification to object to a delegated the date of notification to object to a act. At the initiative of the European delegated act. At the initiative of the Parliament or the Council, it should be European Parliament or the Council, it possible to prolong that period by one should be possible to prolong that period month with regard to significant areas of by three months with regard to significant concern. It should also be possible for the areas of concern. It should also be possible European Parliament and the Council to for the European Parliament and the inform the other institutions of their Council to inform the other institutions of intention not to raise objections. their intention not to raise objections.

Amendment 44

(44) The efficient functioning of this (44) The efficient functioning of this Directive will need to be reviewed, as will Directive will need to be reviewed, as will progress on the establishment of an internal progress on the establishment of an internal market with a high level of consumer market with a high level of consumer protection for credit agreements relating to protection for credit agreements relating to residential immovable property. The residential immovable property. The Commission should therefore review the Commission should therefore review the Directive five years after the deadline for Directive five years after the deadline for its transposition. The review should its transposition. The review should include, among other things, an analysis of include, among other things, an the evolution of the market for non-credit assessment of compliance with and the institutions providing credit agreements impact of this Directive, an analysis of the relating to residential immovable property provision of credit agreements by non- and an assessment on the need for further credit institutions and an assessment on the measures, including a passport for such need for further measures, including a non-credit institutions, an examination of passport for such non-credit institutions, an the necessity to introduce rights and assessment of whether the scope remains obligations with regard to the post- appropriate and of whether additional contractual stage of credit agreements, measures are necessary to ensure the and an assessment of whether an traceability of credit agreements secured extension of the scope to include lending against residential immovable property. to small companies is warranted.

RR\906034EN.doc 33/227 PE469.842v03-00 EN Amendment 45

(46) In accordance with point 34 of the (46) In accordance with point 34 of the Interinstitutional Agreement on better law- Interinstitutional Agreement on better making, Member States are encouraged to law-making, Member States should draw draw up, for themselves and in the up tables illustrating the correlation interest of the Union, their own tables between this Directive and the illustrating, as far as possible, the transposition measures and make them correlation between this Directive and the public, transposition measures, and to make them public,

Amendment 46

Proposal for a directive Article 1

The purpose of this Directive is to lay 1. This Directive lays down a framework down a framework for certain aspects of for certain aspects of the laws, regulations the laws, regulations and administrative and administrative provisions of the provisions of the Member States Member States concerning credit concerning credit agreements relating to agreements concluded with consumers residential immovable property for relating to consumer credit agreements consumers and concerning certain aspects secured by a mortgage or otherwise of the prudential and supervisory relating to residential immovable property requirements for credit intermediaries and for consumers and for associated creditors. prudential and supervisory requirements. 2. This Directive establishes an appropriately harmonised Union framework through, in particular, a common, consistent Union standard for the calculation of the annual percentage rate of charge, the provision of pre- contractual information through a standardised European Standardised Information Sheet and the obligation to undertake an assessment of creditworthiness in relation to credit agreements. In other areas of the Directive a framework of common

PE469.842v03-00 34/227 RR\906034EN.doc EN minimum standards is established.

Amendment 47

1. This Directive shall apply to the 1. This Directive shall apply to: following credit agreements: (a) Credit agreements which are secured (a) Credit agreements which are secured either by a mortgage or by another either by a mortgage or by another comparable security commonly used in a comparable security commonly used in a Member State on residential immovable Member State on residential immovable property or secured by a right related to property or secured by a right related to residential immovable property. residential immovable property; (b) Credit agreements the purpose of which (b) Credit agreements the purpose of which is to acquire or retain property rights in is to acquire or retain property rights in land or in an existing or projected land or in an existing or projected residential building. residential building; (c) Credit agreements the purpose of which (c) Credit agreements the purpose of which is the renovation of the residential is the renovation of the residential immovable property a person owns or aims immovable property a consumer owns or to acquire, which are not covered by aims to acquire. Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008. 1a. Member States which have already applied Directive 2008/48/EC in full to credit agreements within the scope of point (c) of paragraph 1 may continue to apply that Directive to such loans where they do not fall within the scope of point (a) of paragraph 1 for a period of five years after ...*. Member States which before ...* have implemented an information sheet that meets at least the same information requirements as those set out in Annex II may continue to use it for the purposes of Article 9a on pre-contractual information for a period of five years after ...*. 2. This Directive shall not apply to: 2. This Directive shall not apply to: (a) Credit agreements which will (a) Credit agreements where the creditor eventually be repaid from the sale contributes a lump sum, periodic proceeds of an immovable property. payments or other forms of credit

RR\906034EN.doc 35/227 PE469.842v03-00 EN disbursement in return for a sum deriving from the sale of a residential immovable property or a right relating to residential immovable property; and will not seek full repayment of the credit until the occurrence of one or more specified life events defined by Member States, unless a breach of contractual obligations that allows the creditor to terminate the credit agreement occurs; (b) Credit agreements where the credit is (b) Credit agreements where the credit is granted by an employer to his employees granted by an employer to his employees as a secondary activity where such a credit as a secondary activity where such a credit agreement is offered free of interest or at agreement is offered free of interest or at annual percentage rates of charge lower annual percentage rates of charge lower than those prevailing on the market and not than those prevailing on the market and not offered to the public generally. offered to the public generally; (ba) Credit agreements to defer credit agreements for a period of no more than six months, where the borrowing rate for the deferral does not exceed the rate in the credit agreement, where the consumer agrees to be exempted from this Directive; (bb) Credit agreements in the form of overdraft facilities where the consumer agrees to be exempted from the provisions of this Directive; (bc) Credit agreements where the credit is granted free of interest and without any other charges and credit agreements under the terms of which the credit has to be repaid within three months and only insignificant charges are payable; (bd) Credit agreements which are the outcome of a settlement reached in court or before another statutory authority. 2a. Member States may: (a) waive the provisions of Articles 7 to 9a, Article 11 and Annex II for credit agreements of a total value exceeding EUR 2 million. (b) decide that some or all of the Articles of this Directive do not apply to credit agreements where the property is not to be occupied as a dwelling by the

PE469.842v03-00 36/227 RR\906034EN.doc EN consumer or a related person, where the consumer agrees to be exempted from the provisions of this Directive; (c) decide that some or all of the Articles of this Directive do not apply to credit agreements where the credit is due to be repaid within 12 months, where the consumer accepts to be exempted from the provisions of this Directive; (d) decide that some or all of the Articles of this Directive do not apply to credit agreements which relate to the deferred payment, free of charge, of an existing debt, where the consumer agrees to be exempted from this Directive. 2b. Member States may exclude the following from this Directive provided that an equivalent framework is in place to ensure that consumers receive timely and complete information about credit agreements: (a) credit agreements which relate to loans granted to a restricted public under a statutory provision with a general interest purpose, free of interest or at lower interest rates than those prevailing on the market or on other terms which are more favourable to the consumer than those prevailing on the market and at interest rates not higher than those prevailing on the market; (b) credit agreements where the creditor is an organisation within the scope of Article 2(5) of Directive 2008/48/EC. ______* OJ: please insert the date of entry into force of this Directive.

Amendment 48

For the purposes of this Directive, the For the purposes of this Directive, the following definitions shall apply: following definitions shall apply: (a) 'Consumer' means a consumer as (a) 'Consumer' means a consumer as defined in Article 3(a) of Directive defined in Article 3(a) of Directive 2008/48/EC. 2008/48/EC. (b) 'Creditor' means a natural or legal (b) 'Creditor' means a natural or legal person who grants or promises to grant person who grants or promises to grant credit within the meaning of Article 2 in credit within the meaning of Article 2 in the course of his trade, business or the course of his trade, business or profession. profession. (c) 'Credit agreement' means an agreement (c) 'Credit agreement' means an agreement whereby a creditor, directly or through a whereby a creditor, directly or through credit intermediary, grants or promises to a credit intermediary, grants or promises to grant, to a consumer, a credit within the grant, to a consumer, a credit within the meaning of Article 2 in the form of a meaning of Article 2 in the form of a deferred payment, loan or other similar deferred payment, loan or other similar financial accommodation. financial accommodation. (d) 'Ancillary service' means a financial (d) 'Ancillary service' means a service service offered to the consumer by the offered to the consumer by the creditor or creditor or credit intermediary in credit intermediary in conjunction with the conjunction with the credit agreement. credit agreement. (e) 'Credit intermediary' means a natural or (e) 'Credit intermediary' means a natural or legal person who is not acting as a creditor legal person who is not acting as a creditor and who, in the course of his trade, or notary and who, in the course of his business or profession, for a fee, which trade, business or profession, for may take a pecuniary form or any other remuneration, which may take a pecuniary agreed form of financial consideration: form or any other agreed form of financial consideration: (i) offers credit agreements within the (i) presents or offers credit agreements to meaning of Article 2 to consumers; consumers; (ii) assists consumers by undertaking (ii) assists consumers by undertaking preparatory work in respect of credit preparatory work and/or administration in agreements within the meaning of Article respect of credit agreements other than as 2 other than as referred to in point (i); referred to in point (i); (iii) concludes credit agreements within (iii) concludes credit agreements with the meaning of Article 2 with consumers consumers on behalf of the creditor; or on behalf of the creditor. (iiia) provides advisory services. (f) 'Tied credit intermediary' means any (f) 'Tied credit intermediary' means any credit intermediary who acts on behalf of credit intermediary who acts on behalf of and under the full responsibility of only and under the full responsibility of one or one creditor or one group. more creditors or groups.

PE469.842v03-00 38/227 RR\906034EN.doc EN (g) 'Group' means, for the purpose of this (g) 'Group' means, for the purpose of this Directive, creditors which are joined for Directive, creditors which are joined for the purposes of consolidated accounts, as the purposes of consolidated accounts, as defined in Directive 83/349/EEC. defined in Directive 83/349/EEC. (h) 'Credit institution' means credit (h) 'Credit institution' means credit institution as defined in Article 4(1) of institution as defined in Article 4(1) of Directive 2006/48/EC. Directive 2006/48/EC. (i) 'Non-credit institution' means any (i) 'Non-credit institution' means any natural or legal person who grants or creditor that is not a credit institution. promises to grant credit within the meaning of Article 2 in the course of his trade, business or profession and is not a credit institution. (j) 'Staff' means any employees of the (j) 'Staff' means: creditor or credit intermediary having contacts with consumers and who are engaged in the activities covered by this Directive. (i) any natural person working for the creditor, credit intermediary or appointed representative who is engaged or has contacts with consumers in the activities covered by this Directive; or (ii). any natural person directly managing and/or supervising the natural persons referred to in point (i). (k) 'Total cost of the credit to the consumer' (k) 'Total cost of the credit to the consumer' means the total cost of the credit to the means the total cost of the credit to the consumer as defined in Article 3(g) of consumer as defined in Article 3(g) of Directive 2008/48/EC. Directive 2008/48/EC including valuation of property but excluding registration fees for the mortgage or another comparable security. (l) 'Total amount payable by the consumer' (l) 'Total amount payable by the consumer' means the total amount payable by the means the total amount payable by the consumer as defined in Article 3(h) of consumer as defined in Article 3(h) of Directive 2008/48/EC. Directive 2008/48/EC. (m) 'Annual percentage rate of charge' (m) 'Annual percentage rate of charge' means the total cost of the credit to the means the total cost of the credit to the consumer, expressed as an annual consumer, expressed as an annual percentage of the total amount of credit, percentage of the total amount of credit, where applicable, including the costs where applicable, including the costs referred to in Article 12(2). referred to in Article 12(2).

RR\906034EN.doc 39/227 PE469.842v03-00 EN (n) 'Borrowing rate' means the borrowing (n) 'Borrowing rate' means the borrowing rate as defined in Article 3(j) of Directive rate as defined in Article 3(j) of Directive 2008/48/EC. 2008/48/EC. (o) 'Creditworthiness assessment' means (o) 'Creditworthiness assessment' means the evaluation of a consumer’s ability to the evaluation of the prospect for the meet his debt obligations. obligations resulting from the credit agreement to be met. (p) 'Durable medium' means durable (p) 'Durable medium' means durable medium as defined in Article 3(m) of medium as defined in Article 3(m) of Directive 2008/48/EC. Directive 2008/48/EC. (q) 'Home Member State' means: (q) 'Home Member State' means: (i) where the creditor or credit intermediary (i) where the creditor or credit intermediary is a natural person, the Member State in is a natural person, the Member State in which his residence is situated and in which his head office is situated; which he carries on his business; (ii) where the creditor or credit (ii) where the creditor or credit intermediary is a legal person, the Member intermediary is a legal person, the Member State in which its registered office is State in which its registered office is situated or, if under national law it has no situated , if under national law it has a registered office, the Member State in registered office, and head office are which its head office is situated. situated. (r) 'Host Member State' means the Member (r) 'Host Member State' means the Member State in which the creditor or credit State in which the creditor or credit intermediary has a branch or provides intermediary has a branch or provides services. services. (ra) 'Advisory services' means the provision of personal recommendations to a consumer in respect of one or more transactions relating to credit agreements and constitutes a separate activity from the granting of a credit. (rb) 'Residential immovable property' means an item of immovable property primarily intended for residential purposes. (rc) 'Appraiser' means a natural or legal person who, in the course of his trade, business or profession, carries out valuations of residential immovable property or the land on which such residential immovable property is or could be situated. (rd) 'Tying practice' means the offering of one or more ancillary services with the credit agreement in a package where the

PE469.842v03-00 40/227 RR\906034EN.doc EN credit agreement is not made available to the consumer separately. (re) 'Bundling practice' means the offering of one or more ancillary services with the credit agreement in a package where the credit agreement is also made available to the consumer separately but not necessarily on the same terms or conditions as when offered bundled with the ancillary services. (rf) 'Total amount of credit' means the ceiling or the total sums made available under a credit agreement, irrespective of whether they are paid to the consumer or to a third party. (rg) ‘Foreign currency loan’ means a loan which is: (i) denominated in a currency other than that in which the consumer receives the income or holds the assets from which the loan is to be repaid; or (ii) denominated in a currency other than that of the Member State in which the consumer is resident. (rh) 'Variable rate loan' means a credit agreement where the borrowing rate for a part or the totality of the agreement is not determined solely by a fixed percentage agreed on the conclusion of the credit agreement and is usually based on the movement of an underlying index or reference rate regardless of the existence of floors or caps in its evolution.

Amendment 49

Member States shall designate the 1. Member States shall designate the competent authorities empowered to ensure national competent authorities empowered implementation of this Directive and shall to ensure implementation and enforcement ensure that they are granted all the powers of this Directive and shall ensure that they necessary for the performance of their are granted all the investigating and duties. sanctioning powers and resources

RR\906034EN.doc 41/227 PE469.842v03-00 EN necessary for the efficient and effective performance of their duties. Member States shall ensure that the 2. Member States shall ensure that the authorities designated as competent for authorities designated as competent for ensuring the implementation of Articles 18, ensuring the implementation of Articles 18, 19, 20 and 21 of this Directive are one of 19, 19a, 20, 21, 22, 22a and 23 of this those competent authorities included in Directive are: Article 4(2) of Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority). (i) one of those competent authorities included in Article 4(2) of Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority); or (ii) other national authorities provided that national legislation or administrative regulations require those authorities to cooperate with the authorities referred to in point (i) whenever necessary in order to carry out their duties under this Directive. Member States shall inform the 3. Member States shall inform the Commission of the designation of the Commission and EBA of the designation competent authorities, indicating any of the competent authorities, indicating any division of the respective duties between division of the respective duties between different competent authorities. different competent authorities. The Commission shall publish a list of the competent authorities referred to in paragraph 1 in the Official Journal of the European Union at least once a year, and update it continuously on its website. 2. Where there is more than one competent 4. Where there is more than one competent authority on its territory, a Member State authority on its territory, a Member State shall ensure that those authorities shall ensure that those authorities collaborate closely so that they can collaborate closely among themselves and discharge their respective duties with EBA so that they can discharge their effectively. respective duties effectively. 5. Member States shall put in place procedures for the collection and exchange of information from those authorities, in particular for the purpose of implementing Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential

PE469.842v03-00 42/227 RR\906034EN.doc EN oversight of the financial system and establishing a European Systemic Risk Board1 and Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 24 November 2011 on the prevention and correction of macroeconomic imbalances2. ______1 OJ L 331, 15.12.2010, p. 1. 2 OJ L 306, 23.11.2011, p. 25.

Amendment 50

Proposal for a directive Chapter 1 a (new)

Chapter 1a Financial education Article 4a Financial education of consumers 1. Member States shall ensure that measures are in place to support the education of consumers in relation to responsible borrowing and debt management, in particular in relation to credit agreements. 2. Clear, informative documents shall be provided to all first-time buyers, as well as information regarding further assistance in the form of consumer organisations and national supervisory bodies. 3. Member States shall ensure that all stakeholders are adequately involved in the design and development of the measures referred to in this Article.

Amendment 51

1. Member States shall require that, when 1. Member States shall require that, when

RR\906034EN.doc 43/227 PE469.842v03-00 EN granting, intermediating or advising on designing, granting or intermediating on credit and, where appropriate, ancillary credit and, where appropriate, ancillary services to consumers, the creditor or the services to consumers, or when credit intermediary acts honestly, fairly and implementing a credit agreement, the professionally in accordance with the best creditor or the credit intermediary acts interests of the consumer. honestly, fairly, transparently and professionally taking due account of the rights and interests of the consumer. This shall involve taking all steps necessary to meet a consumer's needs and circumstances, taking into account all relevant information relating to a consumer's specific circumstances and any specific requirement made known by a consumer. 2. Member States shall ensure that the 2. Member States shall ensure that the manner in which creditors remunerate their manner in which creditors remunerate their staff and the relevant credit intermediaries staff and credit intermediaries and the and the manner in which credit manner in which credit intermediaries intermediaries remunerate their staff do not remunerate their staff and appointed impede compliance with the obligation to representatives do not impede compliance act in accordance with the best interests with the obligation referred to in of the consumer, as referred to in paragraph 1. paragraph 1. 2a. Member States shall in particular ensure that remuneration of staff responsible for the assessment of creditworthiness is consistent with the remuneration policies for risk takers set out in Annex V, section 11, paragraphs 23(a) and 23(b) of Directive 2006/48/EC and is not contingent on the number or proportion of applications accepted; 2b. Member States shall ensure that where creditors, credit intermediaries or appointed representatives provide advisory services the remuneration structure of the staff involved does not prejudice their ability to provide an objective recommendation and, in particular, that the outcome of those advisory services is not contingent on individual product results or sales targets.

Amendment 52

Minimum competence requirements Minimum knowledge and competence requirements 1. Home Member States shall ensure that: 1. Member States shall ensure that creditors and credit intermediaries require their staff to possess an appropriate level of knowledge and competence in relation to product design, the offering or intermediation of, advising on or granting of credit agreements. Where the conclusion of a credit agreement includes an ancillary service related to it, they shall possess appropriate knowledge and competence in relation to that ancillary service, including that required by sectoral legislation. (a) The staff of creditors and credit intermediaries possess an appropriate level of knowledge and competence in relation to the offering or granting of credit agreements within the meaning of Article 2, or the activity of credit intermediation as defined in Article 3(e). Where the conclusion of a credit agreement includes an ancillary service related to it, in particular insurance or investment services, they shall also possess appropriate knowledge and competence in relation to that ancillary service in order to satisfy the requirements set out in Article 19 of Directive 2004/39/EC and Article 4 of Directive 2002/92/EC. (b) The natural persons within the management of creditors and credit intermediaries who are responsible for or have a role in the intermediation, advice or approval of the credit agreement, possess appropriate knowledge and competence in relation to credit agreements. (c) Creditors and credit intermediaries are monitored in order to assess whether the requirements referred to in paragraph 1, points (a) and (b), are complied with on a

RR\906034EN.doc 45/227 PE469.842v03-00 EN continuing basis. 2. Home Member States shall ensure that 2. Member States shall establish the the appropriate level of knowledge and minimum knowledge and competence competence is determined on the basis of requirements for creditors’, credit recognised qualifications or experience. intermediaries’ and appointed representatives’ staff in accordance with the principles set out in Annex III. 2a. Where a creditor or credit intermediary provides its services within the territory of one or more another Member State: (i) through a branch, the host Member State shall be responsible for establishing the minimum knowledge and competence requirements applicable to the staff of a branch; (ii) under the freedom to provide services, the home Member State shall be responsible for establishing compliance with the minimum knowledge and competence requirements applicable to the staff in accordance with Annex III, except for those requirements referred to in Annex III paragraphs 1(a), 1(b), 1(c) 1(e), 1(f), 1(h), 2 and 3 which shall be established by the host Member State. 2b. The persons referred to in the first paragraph shall be required to undergo professional training on an ongoing basis to update and validate their knowledge and competence. 3. Home Member States shall make public the criteria they have established in order for credit intermediaries or creditors’ staff to meet their competence requirements. Such criteria shall include a list of any recognised qualifications. 4. Powers are delegated to the Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to specify the requirements provided in paragraph 1 and 2 of this Article, and in particular, the necessary requirements for appropriate knowledge and competence.

Proposal for a directive Article 8 – paragraph 1 – subparagraph 1 a (new)

The first subparagraph shall not apply where national legislation requires the indication of the annual percentage rate of charge in advertising concerning credit agreements which does not indicate an interest rate or any figures relating to any cost of credit to the consumer within the meaning of the first subparagraph.

Justification Alignment with Article 4(1) of the Consumer Credit Directive.

Amendment 54

Proposal for a directive Article 8 – paragraph 2

2. The standard information shall specify 2. The standard information shall specify in the following in a clear, concise and a clear, concise and prominent way by prominent way by means of a means of a representative example: representative example:

Amendment 55

Proposal for a directive Article 8 – paragraph 2 – subparagraph 1 – point b

(b) that the product advertised is a credit deleted agreement and, where applicable, is secured either by a mortgage or another comparable security commonly used in a Member State on residential immovable property or by a right related to residential immovable property;

RR\906034EN.doc 47/227 PE469.842v03-00 EN Justification

Mortgages are generally not sold directly on the basis of an advert. Market research shows that consumers retain very little information from mortgage advertising, so it is more effective to focus on a few key principles.

Amendment 56

Proposal for a directive Article 8 – paragraph 2 – subparagraph 1 – point c

(c) the borrowing rate, indicating whether (c) the borrowing rate, indicating whether this is fixed or variable or both, together this is fixed or variable or both, together with particulars of any charges included in with particulars of any charges included in the total cost of the credit to the consumer; the total cost of the credit to the consumer; the annual percentage rate of charge shall be included into the advertisement at least as prominently as any other numerical information;

Amendment 57

Proposal for a directive Article 8 – paragraph 2 – subparagraph 1 – point f

(f) the duration of the credit agreement; (f) if applicable, the duration of the credit agreement;

Justification

Alignment with Article 4(2)(f) of the Consumer Credit Directive.

Amendment 58

Proposal for a directive Article 8 – paragraph 2 – subparagraph 1 – point g

(g) the amount of the instalments; (g) if applicable, the amount of the instalments;

PE469.842v03-00 48/227 RR\906034EN.doc EN Justification

Amendment 59

Proposal for a directive Article 8 – paragraph 2 – subparagraph 1 – point h

(h) the total amount payable by the deleted consumer;

Amendment 60

Proposal for a directive Article 8 – paragraph 2 – subparagraph 1 – point i

(i) a warning, where applicable, deleted concerning the risk of losing the residential immovable property in the event of non-observance of the commitments linked to the credit agreement when the credit is secured by a mortgage or another comparable security commonly used in a Member State on residential immovable property or secured by a right related to residential immovable property.

Justification

Too detailed for inclusion on advertising material, and is not in keeping with the image of a responsible consumer.

Amendment 61

Proposal for a directive Article 8 – paragraph 2 – subparagraph 2

The standard information shall be easily The standard information shall be easily legible or clearly audible as appropriate, legible or clearly audible as appropriate, depending on the medium used for depending on the medium used for advertising and marketing. advertising and marketing. Any information provided throughout the advertising shall adhere to the displayed representative example. Member States shall adopt criteria for defining a representative example.

Amendment 62

4. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to further specify the list of standard information items to be included in advertising. In particular, the Commission, when adopting such delegated acts shall amend, where necessary, the list of the standard information items laid down in paragraphs 2(a) to (i) of this Article.

Amendment 63

Proposal for a directive Article 8 a (new)

Article 8a Tying and related unfair commercial practices 1. Member States shall allow bundling practices but not tying practices. 2. Notwithstanding paragraph 1, Member States may permit tying practices where creditors require the opening or

PE469.842v03-00 50/227 RR\906034EN.doc EN maintaining of a payment account or savings product where it is a fully integrated part of the credit or whose only purpose is to accumulate capital to repay or service the credit, or to conclude a separate credit agreement in conjunction with a shared-equity credit agreement. Furthermore, Member States shall allow creditors to require the consumer to hold a relevant insurance policy and to refuse to grant credit where the consumer does not have an insurance policy with similar characteristics to those offered by the creditor's preferred supplier.

Amendment 64

Member States shall ensure that general Member States shall ensure that accessible information about credit agreements is and comprehensible general information made available by creditors or, where about credit agreements is made available applicable, credit intermediaries at all by creditors and provided to the consumer, times in a durable medium or in electronic either by the creditor in the case of direct form. sales, or through the credit intermediary, at all times on paper or on another durable medium or, upon request, in electronic form.

Justification

It is not clear who is responsible for drawing up this document. Intermediaries do not necessarily have access to all the relevant information. It should therefore be the responsibility of the creditor to provide this information to the intermediary or - when the creditor is distributing directly - directly to the consumer.

Amendment 65

(c) forms of surety; (c) forms of surety, including the possibility for the collateral to be located in a different Member State;

(g) an indicative example of the total cost (g) a representative example of the total of credit for the consumer and annual cost of credit for the consumer and annual percentage rate of charge; percentage rate of charge;

Amendment 67

Proposal for a directive Article 9 – paragraph 1 – subparagraph 2 – point g a (new)

(ga) an indication of possible additional costs, such as in connection with the registration of mortgages or other comparable securities;

Amendment 68

(i) whether there is a possibility of early (i) a description of the conditions attached repayment and, where applicable, a to early repayment; description of the conditions attached to early repayment;

Amendment 69

Proposal for a directive Article 9 – paragraph 1 – subparagraph 2 – point k

(k) details on how to obtain information deleted on tax relief on credit agreement interest or other public subsidies.

Justification

The requirement to provide these details conflicts with the image of a responsible consumer and could also constitute an obstacle to the Single Market. Also brings text into line with the

PE469.842v03-00 52/227 RR\906034EN.doc EN Consumer Credit Directive.

Amendment 70

Proposal for a directive Article 9 – paragraph 1 – subparagraph 2 – point k a (new)

(ka) In the case of a credit agreement under which payments made by the consumer do not give rise to an immediate corresponding amortisation of the total amount of credit, but are used to constitute capital during periods and under conditions laid down in the credit agreement or in an ancillary agreement, the pre-contractual information required under paragraph 2 shall include a clear and concise statement that such credit agreements do not provide for a guarantee of repayment of the total amount of credit drawn down under the credit agreement, unless such a guarantee is given.

Justification

Alignment with Article 5(5) of the Consumer Credit Directive.

Amendment 71

Proposal for a directive Article 9 – paragraph 2 – paragraph 5

2. Member States shall ensure that the deleted creditor and, where applicable, the credit intermediary, without undue delay after the consumer has given the necessary information on his needs, financial situation and preferences in accordance with Article 14, provides the consumer with the personalised information needed to compare the credits available on the market, assess their implications and take an informed decision on whether to conclude a credit agreement. Such information, on paper or on another

RR\906034EN.doc 53/227 PE469.842v03-00 EN durable medium, shall be provided by means of the European Standardised Information Sheet ('ESIS'), as set out in Annex II. Member States shall ensure that when an offer binding on the creditor is provided to the consumer, it shall be accompanied by an ESIS. In such circumstances, Member States shall ensure that the credit agreement cannot be concluded until the consumer has had sufficient time to compare the offers, assess their implications and take an informed decision on whether to accept an offer, regardless of the means of conclusion of the contract. The creditor and, where applicable, the credit intermediary shall be deemed to have fulfilled the requirements on information provision to the consumer prior to the conclusion of a distance contract as set out in Article 3 of Directive 2002/65/EC where they have supplied the ESIS. Any additional information which the creditor or where applicable, the credit intermediary, may provide to the consumer shall be given in a separate document which may be annexed to the ESIS. 3. Powers are delegated to the Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to amend the standard information items laid down in paragraph 1 of this Article and the content and format of the ESIS set out in Annex II. In particular, such delegated acts shall, where necessary: (a) amend the list of the standard information items laid down in paragraph 1 of this Article; (b) delete any of the information items laid down Annex II; (c) make additions to the list of information items laid down in Annex II;

PE469.842v03-00 54/227 RR\906034EN.doc EN (d) amend the presentation of the contents of the ESIS as laid down in Annex II; (e) elaborate on the instructions for the completion of the ESIS as laid down in Annex II. 4. In the case of voice telephony communications, as referred to in Article 3(3) of Directive 2002/65/EC, the description of the main characteristics of the financial service to be provided pursuant to the second indent of Article 3(3)(b) of that Directive shall include at least the items referred to in Part A sections (2), (3), (4) and (5) of Annex II. 5. Member States shall ensure that the creditor or credit intermediary, upon request of the consumer, provides the consumer with a copy of the draft credit agreement free of charge. This provision shall not apply in cases where the creditor is unwilling, at the time of the request, to proceed to the conclusion of the credit agreement with the consumer.

Justification

Amendment 72

Article 9a Pre-contractual information 1. Member States shall ensure that the creditor and, where applicable, the credit intermediary or appointed representative, provides the consumer with the personalised information needed to compare the credits available on the market, assess their implications and take an informed decision on whether to conclude a credit agreement:

RR\906034EN.doc 55/227 PE469.842v03-00 EN (a) without undue delay after the consumer has given the necessary information on his needs, financial situation and preferences in accordance with Article 14; and (b) in good time before the consumer is bound by any credit agreement or offer; such information, on paper or on another durable medium, shall be provided free of charge by means of the European Standardised Information Sheet ('ESIS'), as set out in Annex II. Member States shall ensure that when an offer binding on the creditor is provided to the consumer, it shall be provided in a durable medium and accompanied by an ESIS if none has been provided to the consumer previously or the characteristics of the offer are different from the information contained in the ESIS previously provided. 2. Member States shall ensure that the consumer will have 14 days to compare the offers, assess their implications and take an informed decision. Member States shall ensure that this period can be envisaged either as a period where the offer remains binding on the creditor before the signing of the credit agreement or as a right of withdrawal without further costs. Member States shall ensure that consumers who wish to do so are able to accept the offer before the expiry of the 14-day period. Member States may provide that the right of withdrawal shall be reduced or cease to apply where the consumer undertakes any action which under national law results in the creation or the transfer of a right in a property connected to or using funds obtained under the credit agreement or in the cases where the credit agreement is, in accordance with the law of Member State, established through a system involving a public office-holder or agent who has a statutory obligation to be independent and impartial and who must ensure, by providing to the consumer a personalised

PE469.842v03-00 56/227 RR\906034EN.doc EN and comprehensive contractual and legal information, that the consumer only concludes the agreement on the basis of careful legal consideration and with knowledge of its legal scope. The creditor and, where applicable, the credit intermediary shall be deemed to have fulfilled the requirements on information provision to the consumer prior to the conclusion of a distance contract as set out in Article 3 of Directive 2002/65/EC only where they have at least supplied the ESIS prior to the conclusion of the contract. Member States shall not modify the ESIS but where Member States require additional information, including legal warnings, to be provided to the consumer, that information may be annexed to the ESIS. 3. The Commission shall be empowered to adopt delegated acts in accordance with Article 26, to amend the standard information items laid down in Article 9 and in relation to the ESIS set out in Annex II to: (a) supplement and update the list of information items laid down in Annex II; (b) update the presentation of the contents of the ESIS as laid down in Annex II; (c) supplement and update the instructions for the completion of the ESIS as laid down in Annex II. 4. In the case of voice telephony communications, as referred to in Article 3(3) of Directive 2002/65/EC, the description of the main characteristics of the financial service to be provided pursuant to the second indent of point (b) of Article 3(3) of that Directive shall include at least the items referred to in Part A sections (2), (3), (4) and (5) of Annex II. 5. Member States shall ensure that the creditor or credit intermediary provides

RR\906034EN.doc 57/227 PE469.842v03-00 EN the consumer with a copy in a durable medium of the draft credit agreement free of charge. This provision shall not apply where the creditor is unwilling, at the time of the request, to conclude a credit agreement with the consumer.

Amendment 73

Proposal for a directive Article 9 b (new)

Article 9b Supply and formalisation of the credit agreement In relation to supply and formalisation of a credit agreement, the appraised or appraisal company, notaries, legal advisers or any other provider shall be chosen by mutual agreement of the parties.

Amendment 74

1. Prior to the performance of any of the 1. Member States shall ensure that prior services listed in Article 3(e), a credit to the performance of any of the services intermediary shall provide the consumer listed in point (e) of Article 3, a credit with at least the following information: intermediary shall provide the consumer free of charge with at least the following information on paper or on another durable medium: (a) identity and the geographical address of (a) identity and the geographical address of the credit intermediary; the credit intermediary; (b) the register in which he has been (b) the register in which he has been included and the means for verifying that included, the registration number, where he has been registered; applicable, and the means for verifying that he has been registered; (c) where he is acting as a tied credit (c) where he is tied to one or more intermediary he shall identify himself as creditors he shall identify himself as such such and, at the consumer's request, and provide the names of the creditor(s) for

PE469.842v03-00 58/227 RR\906034EN.doc EN provide the names of the creditor(s) for which he is acting; which he is acting; (d) whether he has a holding, direct or (d) whether he offers the service of advice indirect, representing more than 10 % of and, if so, indicates where the provision the voting rights or of the capital in a of this service is compulsory in given creditor; accordance with Article 17; (e) whether a given creditor or parent undertaking of a given creditor has a holding, direct or indirect, representing more than 10 % of the voting rights or of the capital in the credit intermediary; (f) the fee, where applicable, payable by (e) the fee, where applicable, payable by the consumer to the credit intermediary for the consumer to the credit intermediary or his services; creditor for his services or the basis on which the fee will be calculated; (g) the procedures allowing consumers and (f) the procedures allowing consumers and other interested parties to register other interested parties to register complaints about credit intermediaries complaints internally and, where and, where appropriate, the means by appropriate, the means by which recourse which recourse to the out-of-court to the out-of-court complaint and redress complaint and redress procedures can be procedures can be sought; sought; (h) for those credit intermediaries that are (g) for those credit intermediaries that are not tied, the existence of commissions, not tied, the existence of commissions or where applicable, payable by the creditor other inducements, where applicable, to the credit intermediary for his services. payable by the creditor to the credit intermediary for his services. 2. Credit intermediaries who are not tied 2. Credit intermediaries who are not tied shall, at the consumer's request, provide shall, at the consumer's request, provide information on the variation in levels of information on the variation in levels of commission payable by the different commission payable by the different creditors providing the credit agreements creditors providing the credit agreements being offered to the consumer. The being offered to the consumer. The consumer shall be informed that he has the consumer shall be informed that he has the right to request such information. right to request such information. 3. Powers are delegated to the 3. Member States shall ensure that the Commission in accordance with Article fee, if any, payable by the consumer to the 26 and subject to the conditions of credit intermediary, for its services is Articles 27 and 28, to update the list of communicated to the creditor by the credit information items on credit intermediary, for the purpose of intermediaries to be provided to the calculating of the annual percentage rate consumer, as laid down in paragraph 1 of of charge. this Article. In particular, the Commission, when 3a. Where the credit intermediary charges adopting such delegated acts shall amend, a fee and also receives a commission from where necessary, the information items the creditor, it shall explain to the

RR\906034EN.doc 59/227 PE469.842v03-00 EN laid down in paragraph 1 of this Article. consumer whether or not the commission will be fully or partially offset against the fee. In particular, the Commission, when 3b. Member States shall require credit adopting such delegated acts shall amend, intermediaries to ensure that in addition where necessary, the information items to the disclosures required by this Article, laid down in paragraph 1 of this Article. an appointed representative discloses to the consumer the capacity in which he is acting and the credit intermediary he is representing when contacting or before dealing with any consumers.

Amendment 75

Member States shall ensure that creditors 1. Member States shall ensure that and, where applicable, credit creditors and, where applicable, credit intermediaries provide adequate intermediaries or their appointed explanations to the consumer on the representatives provide adequate proposed credit agreement(s) and any explanations to the consumer on the ancillary service(s), in order to place the proposed credit agreement(s) and any consumer in a position enabling him to ancillary service(s), in order to place the assess whether the proposed credit consumer in a position enabling him to agreements are adapted to his needs and assess whether the proposed credit financial situation. An adequate agreements and ancillary services are explanation shall include the provision of adapted to his needs and to his financial personalised information on the situation. The explanation shall include the characteristics of the credits on offer, pre-contractual information including the without however formulating any ESIS, the essential characteristics of the recommendation. Creditors and, where products proposed, and the specific effects applicable, credit intermediaries shall they may have on the consumer, accurately assess the level of knowledge including the consequences of default in and experience with credit of the payment by the consumer and, where consumer by any means necessary so as ancillary services are bundled with a to enable the creditor or the intermediary credit agreement, whether each to determine the level of explanations to component can be terminated separately be given to the consumer and adjust such and the conditions for doing so. explanations accordingly. 2. Such adequate explanations shall 2. Member States may adapt the manner include an explanation of the information by which and the extent to which and terms included in the pre-contractual theassistance referred to in paragraph 1 information to be provided in accordance is given, as well as by whom it is given, to with Articles 9 and 10 and of the the circumstances of the situation in consequences that concluding the credit which the credit agreement is offered, the agreement may have for the consumer, person to whom it is offered and the

PE469.842v03-00 60/227 RR\906034EN.doc EN including in the event of default in nature of the credit offered. payment by the consumer.

Justification

Alignment with the Consumer Credit Directive.

Amendment 76

1. The annual percentage rate of charge, 1. The annual percentage rate of charge, equating, on an annual basis, to the present equating, on an annual basis, to the present value of all commitments (drawdowns, value of all commitments (drawdowns, repayments and charges), future or repayments and charges), future or existing, agreed by the creditor and the existing, agreed by the creditor and the consumer, shall be calculated in consumer, shall be calculated in accordance with the mathematical formula accordance with the mathematical formula set out in Annex I. set out in Annex I. 2. For the purpose of calculating the annual 2. For the purpose of calculating the annual percentage rate of charge, the total cost of percentage rate of charge, the total cost of the credit to the consumer shall be the credit to the consumer shall be determined excluding any charges payable determined with the exception of any by the consumer for non-compliance with charges payable by the consumer for non- any of his commitments laid down in the compliance with any of his commitments credit agreement. laid down in the credit agreement. Where the opening of an account is The costs of opening and maintaining an obligatory in order to obtain the credit, account, of using a means of payment for the costs of maintaining such an account, both transactions on drawdowns on that the costs of using a means of payment for account and of other costs relating to both payment transactions and drawdowns payment transactions shall be included in on that account, and other costs relating to the total cost of credit to the consumer payment transactions shall be included in whenever the opening or maintaining of the total cost of credit to the consumer, an account is obligatory in order to obtain unless the costs have been clearly and the credit or to obtain it on the terms and separately shown in the credit agreement conditions marketed, unless the costs have or in any other agreement concluded with been clearly and separately shown in an the consumer. agreement concluded with consumer. 3. The calculation of the annual percentage 3. The calculation of the annual percentage rate of charge shall be based on the rate of charge shall be based on the assumption that the credit agreement is to assumption that the credit agreement is to remain valid for the period agreed and that remain valid for the period agreed and that the creditor and the consumer will fulfil the creditor and the consumer will fulfil their obligations under the terms and by the their obligations under the terms and by the dates specified in the credit agreement. dates specified in the credit agreement. Where a fixed borrowing rate is agreed

RR\906034EN.doc 61/227 PE469.842v03-00 EN just for a limited period, a single annual percentage rate of charge can be only calculated for the fixed period. 4. In the case of credit agreements 4. For periods of credit agreements containing clauses allowing variations in unconditionally allowing adjustible the borrowing rate and, where applicable, borrowing rates based on external factors in the charges contained in the annual and, where applicable, in the charges percentage rate of charge but contained in the annual percentage rate of unquantifiable at the time of calculation, charge but unquantifiable at the time of the annual percentage rate of charge shall calculation, the annual percentage rate of be calculated on the assumption that the charge shall be calculated under different borrowing rate and other charges will be assumptions, while avoiding competitive calculated at the level set at the signature distortions in the market: of the contract. (a) once on the assumption that the borrowing rate and other charges will be calculated at the level determined at the signature of the contract; (b) once based on a best-case scenario based on data of the interest rate fluctuations during the last 20 years or since the underlying data for the calculation of the interest rate is available; (c) once based on a worst-case scenario based on data of the different interest rate fluctuations during the last 20 years or since the underlying data for the calculation of the interest rate is available. 5. Powers are delegated to the Commission 4a. In the case the credit agreement in accordance with Article 26 and subject relates to a foreign currency loan the to the conditions of Articles 27 and 28, to annual percentage rate of charge shall be amend the formula and the assumptions once calculated on the assumption that used to calculate the annual percentage rate the relation between the currency of the of charge as set out in Annex I. loan and the national currency is at the level determined at the signature of the contract and once based on a scenario based on the assumption, that the national currency loses 20 % of its value in relation to the currency of the loan. The Commission shall, when adopting 5. The Commission shall be empowered to such delegated acts, amend, where adopt delegated acts in accordance with necessary, the formula or assumptions Article 26 to amend the remarks or laid down in Annex I, in particular if the update the assumptions used to calculate assumptions set out in this Article and in the annual percentage rate of charge as Annex I do not suffice to calculate the set out in Annex I, in particular if the

PE469.842v03-00 62/227 RR\906034EN.doc EN annual percentage rate of charge in a remarks or assumptions set out in this uniform manner or are not adapted any Article and in Annex I do not suffice to more to the commercial situation at the calculate the annual percentage rate of market. charge in a uniform manner or are not longer adapted to the commercial situation on the market.

Amendment 77

2. However, the parties may agree in the 2. However, the parties may agree in the credit agreement that the information credit agreement that the information referred to in paragraph 1 is to be given to referred to in paragraph 1 is to be given to the consumer periodically in cases where the consumer periodically in cases where the change in the borrowing rate correlates the change in the borrowing rate correlates directly with a change in a reference rate, directly with a change in a reference rate, the new reference rate is made publicly the new reference rate is made publicly available by appropriate means and the available by appropriate means and the information concerning the new reference information concerning the new reference rate is also kept available in the premises rate is also kept available in the premises of the creditor. of the creditor, and communicated personally to the consumer together with the amount of new monthly instalments. The creditor may continue to inform consumers periodically about changes in the borrowing rate, where the borrowing rate does not correlate directly with a change in reference rate, if such provisions were in place prior to ...*. ______* OJ: please insert the date of entry into force of this Directive.

Justification

In einigen Mitgliedstaaten können die Verbraucher durch Anzeigen in nationalen Zeitungen über derartige Änderungen des Sollzinssatzes informiert werden. Wenn eine solche Gepflogenheit besteht und in dem betreffenden Mitgliedstaat umfassend anerkannt wird, sollten die Mitgliedstaaten das Recht haben, diese Regelung beizubehalten.

Amendment 78

Proposal for a directive Article 13 – paragraph 2 a (new)

2a. Where changes in the borrowing rate are determined by way of auction on the capital markets and it is therefore impossible for the creditor to inform the consumer of any change before the change enters into force, the creditor shall, in good time before the auction, inform the consumer in writing of the upcoming procedure and the expected level of the new borrowing rate.

Justification

When changes of the borrowing rate are determined by an auction on the capital markets the creditor will not know the exact new rate until the auction has closed and the bonds have been sold.

Amendment 79

1. Member States shall ensure that, before 1. Member States shall ensure that, before the conclusion of the credit agreement, a concluding a credit agreement, the creditor thorough assessment of the consumer’s assesses the consumer's creditworthiness creditworthiness is conducted by the based on objective criteria in order to creditor, based on criteria including the verify the prospect for the consumer to consumer’s income, savings, debts and meet his obligations under the credit other financial commitments. That agreement. The information on which the assessment shall be carried out on the assessment is based shall be documented basis of the necessary information, and maintained1. obtained by the creditor or, where applicable, credit intermediary from the consumer and from relevant internal or external sources and shall respect the requirements with regard to necessity and proportionality set out in Article 6 of Directive 95/46/EC. Member States shall ensure that creditors establish appropriate processes to assess the creditworthiness of the consumer. These processes shall be reviewed at regular intervals and up-to-date records of those processes shall be maintained.

PE469.842v03-00 64/227 RR\906034EN.doc EN 1a. Member States shall ensure that where a creditor failed to correctly conduct the creditworthiness assessment as described in this Article and subsequently granted a credit agreement based on that incorrectly conducted creditworthiness assessment, the credit agreement shall not afterwards be cancelled or altered to the detriment of the consumer as a result. 2. Member States shall ensure the 2. Member States shall ensure that: following: (a) Where the assessment of the (a) The creditor only makes the credit consumer’s creditworthiness results in a available to the consumer where the negative prospect for his ability to repay result of the creditworthiness assessment the credit over the lifetime of the credit indicates that the obligations resulted agreement, the creditor refuses credit. from the credit agreement are likely to be met in the manner required under that agreement. (b) Where the credit application is rejected, the creditor informs the consumer immediately and without charge of the reasons for rejection. (c) In accordance with Article 10 of (c) In accordance with Article 10 of Directive 95/46/EC, the creditor informs Directive 95/46/EC, the creditor informs the consumer in advance that a database is the consumer in advance that a database is to be consulted. to be consulted. (d) Where the credit application is rejected (d) If the credit application is rejected on on the basis of the data contained, or lack the basis of a database consultation, the thereof, in a database that has been creditor informs the consumer immediately consulted, the creditor informs the and without charge of the result of such consumer immediately and without charge consultation and of the particulars of the of the name of the database that was database consulted. consulted as well as of its controller and of his right to access and, where necessary, his right to rectify his data in that database. (e) Without prejudice to the general right (e) Without prejudice to the general right of access contained in Article 12 of the of access contained in Article 12 of the Directive 95/46/EC, where the application Directive 95/46/EC, where the application is rejected on the basis of an automated is rejected on the basis of an automated decision or a decision based on methods decision or a decision based on methods such as automated credit scoring, the such as automated credit scoring, the creditor informs the consumer immediately creditor informs the consumer immediately and without charge and that the creditor and without charge. explains the logic involved in the automated decision to the consumer.

RR\906034EN.doc 65/227 PE469.842v03-00 EN (f) The consumer has the opportunity to request for the decision to be reviewed manually. 3. Member States shall ensure that, where the parties consider increases in the total amount of credit extended to the consumer after the conclusion of the credit agreement, the financial information at the disposal of the creditor concerning the consumer is updated and the consumer’s creditworthiness re- assessed before any significant increase in the total amount of credit is granted. 4. Further to assessing a consumer’s creditworthiness, Member States shall ensure that creditors and credit intermediaries obtain the necessary information regarding the consumer’s personal and financial situation, his preferences and objectives and consider a sufficiently large number of credit agreements from their product range in order to identify products that are not unsuitable for the consumer given his needs, financial situation and personal circumstances. Such considerations shall be based on information that is up to date at that moment in time and on reasonable assumptions as to the consumer’s situation over the term of the proposed credit agreement. 5. Powers are delegated to the Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to specify and amend the criteria to be considered in the conduct of a creditworthiness assessment as laid down in paragraph 1 of this Article and in ensuring that credit products are not unsuitable for the consumer as laid down in paragraph 4 of this Article. ______1 FSB Principles for Sound Residential Mortgage Underwriting Practices April 2012, (1.2.).

Article 14a Property valuation 1. Member States shall ensure that sound valuation practices are applied in accordance with international standards and methods and the importance of sound regulation and oversight of appraisers is recognised. 2. Member States shall require that internal and external appraisers carrying out such valuations are professionally competent and sufficiently independent to provide an impartial and objective valuation to be documented in a durable medium and that lenders keep a record of it.

Amendment 81

Disclosure obligation on the part of the Disclosure and verification of consumer consumer information 1. Member States shall ensure that 1. The creditworthiness assessment shall consumers provide creditors and, where be carried out on the basis of sufficient, applicable, credit intermediaries with proportionate and appropriately verified complete and correct information on their income and financial information financial situation and personal obtained by the creditor from relevant circumstances in the context of the credit internal or external sources. application process. That information should be supported, when necessary, by documentary evidence from independently verifiable sources. 2. As regards the information to be 2. Member States shall ensure that provided by the consumer in order for the creditors specify clearly and in an creditor to be able to conduct a thorough understandable form the necessary assessment of the consumer’s information and independently verifiable creditworthiness and make a decision on evidence that the consumer needs to

RR\906034EN.doc 67/227 PE469.842v03-00 EN whether or not to grant the credit, provide and state the timing by which Member States shall ensure that creditors, consumers are required to provide the at the pre-contractual phase, clearly information. Member States shall allow specify the information, including creditors to seek clarification of the independently verifiable evidence where information requested under paragraph 1 necessary, that the consumer needs to where necessary to enable the assessment provide. Member States shall also ensure of creditworthiness. Member States shall that creditors state the exact timing by not allow creditors to use a failure to which consumers are required to provide provide information to justify terminating such information. the credit agreement once it has been concluded. Member States shall ensure that in cases 3. Member States shall have measures in where the consumer chooses not to place to ensure that consumers provide provide the information necessary for an correct information in accordance with assessment of his creditworthiness, the paragraph 2. Where the consumer creditor or credit intermediary warns the chooses not to provide the information or consumer that they are unable to carry out verification necessary for an assessment of a creditworthiness assessment and his creditworthiness, the creditor shall therefore that the credit may not be warn the consumer that they are unable to granted. This warning may be provided in carry out a creditworthiness assessment a standardised format. and therefore that the credit may not be granted. This warning may be provided in a standardised format. 3. This Article shall be without prejudice to the application of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, in particular Article 6 thereof.

Amendment 82

1. Each Member State shall ensure non- 1. Each Member State shall ensure access discriminatory access for all creditors to for all creditors to databases used in that databases used in that Member State for Member State for assessing the assessing the creditworthiness of creditworthiness of consumers and for consumers and for monitoring consumers’ monitoring consumers’ compliance with compliance with the credit obligations over the credit obligations over the life of the the life of the credit agreement. Such credit agreement. The conditions for databases comprise databases operated by access shall be non-discriminatory. private credit bureaux or credit reference

PE469.842v03-00 68/227 RR\906034EN.doc EN agencies and public credit registers. 2. Powers are delegated to the Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to define uniform credit registration criteria and data processing conditions to be applied to the databases referred to in paragraph 1 of this Article. In particular, such delegated acts shall define the registration thresholds to be applied to such databases and shall provide for agreed definitions for key terms used by such databases. 3. The information in the databases shall be provided unless the provision of such information is prohibited by other Union legislation or is contrary to objectives of public policy or public security. 4. This Article shall be without prejudice to 2. This Article shall be without prejudice to the application of Directive 95/46/EC of the application of Directive 95/46/EC of the European Parliament and of the the European Parliament and of the Council of 24 October 1995 on the Council of 24 October 1995 on the protection of individuals with regard to the protection of individuals with regard to the processing of personal data and on the free processing of personal data and on the free movement of such data. movement of such data.

Amendment 83

Advice standards Standards for advisory services 1. For the purposes of this Directive, 'advice' constitutes a separate service from the granting of a credit. Such a service can only be marketed as advice when the remuneration of the individual providing the service is transparent to the consumer. 2. Member States shall ensure that the 1. Member States shall ensure that the creditor or credit intermediary informs the creditor, credit intermediary or appointed consumer, in the context of a given representative explicitly informs the transaction, whether or not advice is being consumer, in the context of a given or will be provided. This may be done transaction, whether advisory services are

RR\906034EN.doc 69/227 PE469.842v03-00 EN through additional pre-contractual being or can be provided to the consumer. information. Where advice is provided to consumers, in addition to the requirements set out in Articles 5 and 6, Member States shall ensure that creditors and credit intermediaries: 2. Member States shall ensure that before the provision of advisory services or, where applicable, the conclusion of a contract for the provision of advisory services, the creditor, credit intermediary or appointed representative informs the consumer in a durable medium: (a) consider a sufficiently large number (a) whether the recommendation will be of credit agreements available on the based on considering only their own market so as to enable the product range in accordance with point recommendation of the most suitable (b) of paragraph 2a or a wide range from credit agreements for the consumer’s across the market in accordance with needs, financial situation and personal point (c) of paragraph 2a; circumstances; (b) obtain the necessary information (b) where applicable, the fee payable by regarding the consumer’s personal and the consumer for the advisory services or financial situation, his preferences and the method used for its calculation. objectives so as to enable the recommendation of suitable credit agreements. Such an assessment shall be based on information that is up to date at that moment in time and on reasonable assumptions as to the consumer’s situation over the term of the proposed credit agreement. 2a. Where advisory services are provided to consumers, Member States shall ensure, in addition to the requirements set out in Articles 5 and 7, that: (a) creditors, credit intermediaries or appointed representatives obtain the necessary information regarding the consumer’s personal and financial situation, his preferences and objectives so as to enable the recommendation of suitable credit agreements; (b) creditors, tied credit intermediaries or appointed representatives appointed by tied credit intermediaries consider a sufficiently large number of credit agreements in their product range;

PE469.842v03-00 70/227 RR\906034EN.doc EN (c) not tied credit intermediaries or appointed representatives appointed by not tied credit intermediaries consider a sufficiently large number of credit agreements available on the market; (d) creditors, credit intermediaries or appointed representatives act in the best interests of the consumer by recommending credit agreements which are suitable for the consumer's needs, financial situation and personal circumstances; and (e) the creditor, credit intermediary or appointed representative providing the advisory services gives the consumer a record in a durable medium of the advice provided; 2b. Member States should only allow the use of the term "independent advice" or "independent advisor" when creditors, tied credit intermediaries or credit intermediaries or appointed representatives that provide advisory services: - are not remunerated at all by one or more creditors; or - are remunerated by a number of creditors representing at least a majority of the market given that the remuneration is disclosed to the consumer and does not incentivise the creditor to act against the best interests of consumers. 2c. Member States may provide for an obligation for creditors, credit intermediaries and appointed representatives to warn a consumer when considering the consumer's financial situation, a credit agreement may induce a specific risk for the consumer. 2d. Member States shall ensure that any creditor or credit intermediary providing advisory services is duly authorised and that the relevant staff are competent to make a personalised recommendation which is in the best interests of the consumer. Appointed representatives providing advisory services shall be duly

RR\906034EN.doc 71/227 PE469.842v03-00 EN registered. 2e. This Article shall be without prejudice to the ability of Member States to provide services for consumers to help them understand their financial needs and which types of products are likely to meet those needs.

Amendment 84

Proposal for a directive Chapter 8 a (new)

Chapter 8a Sound performance of credit agreements Article -18a Foreign currency loans and variable interest rates 1. Member States shall ensure that where a credit agreement relates to a foreign currency loan, the consumer shall have the right to convert the loan into an alternative currency, in accordance with a transparent method disclosed to the consumer in pre-contractual information. 2. The alternative currency referred to in paragraph 1 shall be either: (a) the currency in which the consumer receives income or holds assets from which the loan is to be repaid, as indicated at the time the most recent creditworthiness assessment in relation to the credit agreement was made; or (b) the currency of the Member State in which the consumer is resident. 3. Member States shall provide that where the right referred to in paragraph 1 is referred to: (a) the creditor is entitled to fair and objectively justified compensation for possible costs directly linked to the exercise of the right;

PE469.842v03-00 72/227 RR\906034EN.doc EN (b) the exchange rate used for the conversion shall be the market exchange rate applicable on the day of application for the conversion unless otherwise agreed by the parties or unless a Member State has specified other arrangements before the conclusion of the credit agreement; (c) the creditor shall be entitled to adjust the interest rate and interest reference rate where this has been provided for in the credit agreement. 4. Member States shall ensure that, for credit agreements in a foreign currency, a trigger credit amount payable or a maximum amount payable is included in the credit agreement. When the trigger credit amount payable or a maximum amount has been reached, the creditor shall warn the consumer of the high rise of the credit amount payable. In this case the consumer shall have the right to convert the loan pursuant to paragraph 1. In the case when the total credit amount in the national currency is not limited by any caps, a scenario should be provided to the consumer based on the assumption, that the national currency loses 20 % of value in relation to the currency of the loan. 5. Member States shall ensure that, where a credit agreement unconditionally allows variations on the interest rate unquantifiable at the time of the conclusion of the credit agreement and based on external factors, the underlying data for the calculation of the interest rate has to be available for at least 14 years. For agreements on variable interest rates Member States shall ensure that creditors, tied credit intermediaries, credit intermediaries or appointed representatives inform the consumer before concluding the contract on the possible fluctuation of the interest rate. In cases where the variable interest rate is limited by caps, a best and worst-case

RR\906034EN.doc 73/227 PE469.842v03-00 EN scenario shall be provided to the consumer based on the caps. In cases where the variable interest rate is not limited by any caps, a best and worst-case scenario should be provided to the consumer based on data of the interest rate fluctuations during last 20 years or since the underlying data for the calculation of the interest rate is available.

Amendment 85

Proposal for a directive Article -18 b (new)

Article -18b Variable rate loans and underlying indexes and reference rates Where the credit agreement is a variable rate loan: 1. Member States shall ensure that any index or reference rate used to calculate the borrowing rate is clear, accessible, objective and verifiable by the parties to the credit agreement and the competent authorities. 2. Member States shall ensure that the providers of indexes used to calculate the borrowing rate keep the documentation used for its calculation and maintain their historical records. 3. Where justified, Member States may prohibit the standardised use of indexes that are not publicly available in a website or are not published in an official journal. Member States may also require that the providers of the standardised indexes used to calculate the borrowing rate publish on a daily basis information on the average borrowing rate, the maximum borrowing rate and the minimum borrowing rate for the past 20 years or where such data is not available for the

PE469.842v03-00 74/227 RR\906034EN.doc EN longest period for which data is available. Additionally Member States may require that creditors disclose such information to the consumer annexed to the ESIS before concluding a credit agreement. 4. Member States may adopt provisions to ensure symmetry between contractual clauses establishing limits such as floors and caps for the evolution of the variable rate.

Amendment 86

Proposal for a directive Chapter 8 – title

Early repayment Sound performance of credit agreements

Amendment 87

1. Member States shall ensure that the 1. Member States shall ensure that the consumer has a statutory or contractual consumer has a right to discharge his right to discharge his obligations under a obligations fully or partially under a credit credit agreement prior to the expiry of that agreement prior to the expiry of that agreement. In such cases, he shall be agreement, without penalty on the entitled to a reduction in the total cost of consumer, while ensuring the indemnity the credit, such a reduction consisting of of the creditor. In such cases, the the interest and the costs for the consumer shall be entitled to a reduction remaining duration of the contract. equivalent to the early repaid amount in the total cost of the credit. 2. Member States may provide that the 2. Member States shall provide that the exercise of the right referred to in creditor is entitled to a fair and objective paragraph 1 is subject to certain compensation, where justified, for possible conditions. Such conditions may include costs directly linked to the early time limitations on the exercise of the repayment. The compensation shall not right, different treatment depending on exceed the economic loss of the lender. the type of the borrowing rate, or The consumer shall be clearly and fully restrictions with regard to the informed of the right referred to in circumstances under which the right may paragraph 1 and of the amount of the be exercised. Member States may also compensation or of the transparent provide that the creditor should be entitled method for its calculation before signing to fair and objectively justified

RR\906034EN.doc 75/227 PE469.842v03-00 EN compensation for potential costs directly the contract. linked to early repayment of the credit. In any event, if the early repayment falls within a period for which the borrowing rate is fixed, exercise of the right may be made subject to the existence of a special interest on the part of the consumer. Where a Member State lays down such 2a. Where the early repayment falls conditions, these shall not make the within a period for which the borrowing exercise of the right referred to in rate is fixed Member States may provide paragraph 1 excessively difficult or that the exercise of the right referred to in onerous for the consumer. paragraph 1 is subject to certain conditions and without prejudice to the right of creditors in accordance with paragraph 2. In this case the exercise of the right may be subject to the existence of a legitimate interest on the part of the consumer whose nature shall be specified by Member States. 3a. Member States may opt for caps on the compensation payable under paragraph 2 or maximum periods after which such compensation may no longer be claimed by the creditor.

Amendment 88

Article 18a Flexible and reliable markets 1. Member States shall develop a framework: (a) to allow creditors to transfer without registration of a new mortgage deed credit agreements or portfolios of credit agreements to other creditors unless explicitly forbidden by the credit agreement provided the loan conditions are not altered to the disadvantage of the consumer; and (b) to allow creditors and consumers to agree on the portability of a credit

PE469.842v03-00 76/227 RR\906034EN.doc EN agreement on moving house. 2. Member States that allow the marketing of reverse agreements in their territory may develop a framework to allow creditors and consumers to agree the replacement of a credit agreement with a reverse agreement. 3. Member States shall ensure that effective mechanisms are in place to ensure that borrowers have a clear and legally enforceable title to the property and the traceability of credit agreements related to residential immovable property and related financial instruments. 4. The Joint Committee established under Article 54 of Regulations EU (No) 1093/2010 and (EU) No 1095/2010 shall coordinate the work of EBA and ESMA in developing guidelines on methodologies for ensuring traceability of credit agreements, associated collateral and related financial instruments. 5. Member States shall promote the use of indices of residential immovable property in order to provide an improved basis for the monitoring of trends in valuation of residential immovable property.

Amendment 89

Proposal for a directive Article 18 b (new)

Article 18b Arrears and foreclosure 1. Member States shall ensure that creditors exercise reasonable forbearance and make all other reasonable attempts to resolve the position before initiating foreclosure proceedings. 2. Member States shall ensure that any charges to compensate damages for default to be paid by the consumer are proportionate to the costs incurred by the

RR\906034EN.doc 77/227 PE469.842v03-00 EN creditor. 3. Member States shall ensure that: (a) creditors take reasonable steps to obtain the best price for the foreclosed property, taking account of factors such as market conditions as well as any increase in the amount owed by the consumer; (b) where the parties to the credit agreement expressly agree, the return of the collateral is sufficient to repay the loan; (c) Where creditors have full recourse to a consumer's assets after foreclosure proceedings are completed and outstanding debt remains, measures to facilitate repayment arrangements are reasonable and have regard to the interests and practical circumstances of the consumer. This could include allowing measures to limit the seizure of wages, retirement pensions or equivalent to retain a minimum income and avoid household over-indebtedness are in place.

Amendment 90

Proposal for a directive Chapter 9 - title

Chapter 9 Chapter 9 Prudential and supervisory requirements General prudential and supervisory requirements

Amendment 91

Proposal for a directive Article -19 a (new)

Article -19a General requirements 1. Member States shall ensure that there is an effective framework of underwriting

PE469.842v03-00 78/227 RR\906034EN.doc EN standards for credit agreements, incorporating the principles set out in this Directive and measures to prevent household over-indebtedness, which can be effectively supervised and monitored. Such standards may include prudent loan-to-value ratios1. 2. Member States shall ensure that competent authorities have powers to specify more stringent and proportionate underwriting criteria for the situations where the underlying risks are higher for consumers. These may include additional risk warnings, specifying loan-to-value or other ratios and guarantees and products to insure or hedge the risks. 3. EBA may on its own initiative or at the request of the ESRB in accordance with Article 9 of Regulation (EU) No 1092/2010, based on sound assessment of developments in the residential property market in a Member State, issue warnings to the relevant competent authorities and issue recommendations calling for the introduction of additional measures. ______1FSB Consultation on Principles for Sound Residential Mortgage Underwriting Principles, October 2011

Amendment 92

Proposal for a directive Article -19 b (new)

Article -19b Supervision of credit registers Member States shall ensure that credit registers operating on their territories are adequately supervised by the competent authorities and by data protection supervisors. Without prejudice to the powers conferred by Regulation (EU) No 1093/2010, EBA shall contribute to the supervision of credit registers that operate

RR\906034EN.doc 79/227 PE469.842v03-00 EN cross-border within the Union.

Amendment 93

1. Credit intermediaries shall be duly 1. Credit intermediaries shall be duly authorised to carry out the activities set out authorised to carry out the activities set out in Article 3(e) by a competent authority as in Article 3(e) by a competent authority defined in Article 4 in their home Member referred to in Article 4 in their home State. Such authorisation shall be granted Member State. Such authorisation shall be on the basis of requirements established in granted on the basis of requirements the home Member State of the credit established in the home Member State of intermediary and shall include the the credit intermediary and shall include fulfilment of the professional requirements the fulfilment of the professional laid down in Article 20. requirements laid down in Article 20. 1a. Appointed representatives appointed under Article 19a shall not be considered as credit intermediaries for the purposes of this Article. 2. Home Member States shall ensure that 2. Home Member States shall ensure that authorised credit intermediaries comply authorised credit intermediaries comply with the conditions for initial authorisation with the conditions for initial authorisation on a continuing basis. on a continuing basis. 3. Home Member States shall ensure that 3. Home Member States shall ensure that the authorisation of credit intermediaries is the authorisation of credit intermediaries is withdrawn where either: suspended or withdrawn where either: (a) the credit intermediary no longer fulfils (a) the credit intermediary no longer fulfils the requirements under which authorisation the requirements under which authorisation was granted; was granted; (b) the credit intermediary has obtained the (b) the credit intermediary has obtained the authorisation through false statements or authorisation through false statements or any other irregular means. any other irregular means. 4. Member States shall ensure that 4. Member States shall ensure that authorised credit intermediaries are subject authorised credit intermediaries are subject to supervision of their ongoing activities by to supervision of their ongoing activities by their home competent authority as referred their home competent authority and, where to in Article 4. applicable, by the competent authority in the Member State where a branch is established as referred to in Articles 4 and 22. 4a. The provisions of this Article should apply neither to credit institutions nor to insurance companies which act as credit

PE469.842v03-00 80/227 RR\906034EN.doc EN intermediaries. Provided that the obligations under Articles 9a, 14 and 17 of this Directive are complied with, they should also not be applied to those borrowers which are not creditors or credit intermediaries and are allowed by Member States to transfer, free of charge and with the agreement of the creditor, a credit agreement in parallel to the sale of a property.

Amendment 94

Article 19a Appointed representatives 1. Member States may decide to allow a credit intermediary to appoint appointed representatives. 2. Member States shall require that the credit intermediary remains fully and unconditionally responsible for any action or omission on the part of the appointed representative when acting on behalf of the credit intermediary. However, where the credit intermediary that has appointed an appointed representative which is tied to only one creditor as set out in Article 3(f), the creditor shall remain fully and unconditionally responsible for any action or omission on the part of the appointed representative that is acting on behalf of the credit intermediary. Member States shall require the credit intermediary to ensure that the appointed representative complies with the requirements set out in points (a) to (c) of Article 21(2) to 21(2). However, the home Member State may provide that the professional indemnity insurance or a comparable guarantee can be provided by a credit intermediary for which the

RR\906034EN.doc 81/227 PE469.842v03-00 EN appointed representative is empowered to act. 3. Member States that decide to allow a credit intermediary to appoint appointed representatives shall establish a public register. Appointed representatives shall be registered in the public register in the Member State where they are established. The register shall be updated on a regular basis. It shall be publicly available for consultation. Where the Member State in which the appointed representative is established by way of a branch has decided, in accordance with paragraph 1, not to allow the credit intermediaries authorised by their competent authorities to appoint appointed representatives, those appointed representatives shall be registered with the competent authority of the home Member State of the credit intermediary on whose behalf it acts. 4. Member States shall require the credit intermediaries to monitor the activities of their appointed representatives in order to ensure full compliance with this directive. In particular, the credit intermediaries shall be responsible for monitoring compliance with the knowledge and competence requirements of the appointed representatives and its staff. 5. Member States may reinforce the requirements set out in this Article or add other requirements for appointed agents registered within their jurisdiction.

Amendment 95

1. Member States shall ensure that a 1. Member States shall ensure that a register of authorised credit intermediaries register of authorised credit intermediaries is established and kept up to date. is established and kept up to date. 2. Member States shall ensure that all 2. Member States shall require that:

PE469.842v03-00 82/227 RR\906034EN.doc EN authorised credit intermediaries, whether established as natural or legal persons, are registered with a competent authority as referred to in Article 4, in their home Member State. (a) any credit intermediary which is a legal person shall have its head office in the same Member State as its registered office, if it has a registered office under its national law; and (b) any credit intermediary which is not a legal person or which is a legal person but under its national law has no registered office shall have its head office in the Member State in which it actually carries on its business. As regards legal persons, the register referred to in paragraph 1 shall specify the names of the persons within the management who are responsible for the intermediation business. Member States may also require the registration of all natural persons who fulfil a client-facing function in an undertaking that pursues the activity of credit intermediation. The register shall indicate the Member State(s) where the intermediary intends to conduct business under the rules on the freedom of establishment or on the freedom to provide services and has informed its home Member State competent authority thereof. 3. Member States shall ensure that credit 3. Member States shall ensure that all intermediaries who have had their authorised credit intermediaries, whether authorisation withdrawn are deleted from established as natural or legal persons, the register without undue delay. are registered with a competent authority as referred to in Article 4, in their home Member State. As regards legal persons, the register referred to in paragraph 1 shall specify the names of the persons within the management who are responsible for the intermediation business. Member States may also require the registration of all natural persons who fulfil a client-facing function in an undertaking that pursues the activity of credit intermediation.

RR\906034EN.doc 83/227 PE469.842v03-00 EN The register shall indicate the Member State(s) where the intermediary intends to conduct business under the rules on the freedom of establishment or on the freedom to provide services and has informed its home Member State competent authority thereof. 3a. Member States shall ensure that credit intermediaries who have had their authorisation withdrawn are deleted from the register without undue delay. 4. Member States shall ensure that a single 4. Member States shall ensure that a single information point is established to allow information point is established to allow quick and easy public access to quick and easy public access to information from the national register, information from the national register of which shall be compiled electronically and credit intermediaries, which shall be kept constantly updated. This information compiled electronically and kept constantly point shall also provide the identification updated. This information point shall also details of the competent authorities of each provide the identification details of the Member State referred to in Article 4. competent authorities of each Member State referred to in Article 4. Member States shall provide EBA with access to the single information point and EBA shall publish on its website references or hyperlinks to this information point. 4a. The provisions of this Article shall apply neither to credit institutions nor to insurance companies which act as credit intermediaries.

Amendment 96

3. Powers are delegated to the deleted Commission to adopt and, where necessary amend, regulatory technical standards to stipulate the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b). The regulatory technical standards referred to in subparagraph 1 shall be adopted in accordance with Articles 10 to

PE469.842v03-00 84/227 RR\906034EN.doc EN 14 of Regulation (EU) No 1093/2010. EBA shall develop draft regulatory technical standards to stipulate the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b) for submission to the Commission [within 6 months of the adoption of the proposal]. EBA will review, and if necessary, develop draft regulatory technical standards to amend the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b) for submission to the Commission for the first time [4 years after entry into force of the Directive] and biannually thereafter.

Amendment 97

3a. Member States shall be entitled to restrict any payments by consumers to creditors and credit intermediaries before the actual conclusion of a credit agreement.

Justification

This is a necessary provision to prevent fraud attempts.

Amendment 98

1. The authorisation of credit 1. The authorisation of a credit intermediaries by their home Member intermediary by the competent authority State shall be effective for the entire of its home Member State as laid down in territory of the Union without a Article 19 shall be effective for the entire requirement for further authorisation by territory of the Union without further the competent authorities of the host authorisation by the competent authorities

RR\906034EN.doc 85/227 PE469.842v03-00 EN Member State(s). of the host Member State(s) being required for the provision of these services, provided that the activities a credit intermediary intends to carry out in the host Member State(s) are covered by the authorisation. However credit intermediaries shall not be allowed to offer credit agreements of a non-credit institution to consumers in a Member State where non-credit institutions are not allowed to operate. 1a. Paragraph 1 does not apply to appointed representatives. 2. Any credit intermediary intending to 2. Any authorised credit intermediary carry on business for the first time in one intending to carry on business for the first or more Member States under the freedom time in one or more Member States under to provide services or the freedom of the freedom to provide services or establishment shall inform the competent establishing a branch shall inform the authorities of its home Member State. competent authorities of its home Member State. Within a period of one month after being Within a period of one month after being informed, those competent authorities shall informed, those competent authorities shall notify the competent authorities of the host notify the competent authorities of the host Member State(s) concerned of the intention Member State(s) concerned of the intention of the credit intermediary and shall at the of the credit intermediary and shall at the same time inform the credit intermediary same time inform the credit intermediary concerned of that notification. concerned of that notification. They shall also notify the competent authorities of the host Member State (s) concerned on the creditor or creditors to which the credit intermediary is tied and whether the creditor takes full and unconditional responsibility for credit intermediary’s activities. The host Member State shall use the information received from the home Member State to introduce the necessary information in its register. The credit intermediary may start business The credit intermediary may start business one month after the date on which he was one month after the date on which he was informed by the competent authorities of informed by the competent authorities of the home Member State of the notification the home Member State of the notification referred to in the second subparagraph. referred to in the second subparagraph. 3. In cases where the authorisation of 3. Before the branch of a credit credit intermediaries is withdrawn by the intermediary commences its activities or home Member State that home within two months of receiving the Member State shall notify the host information referred to in paragraph 2, Member State(s) of such withdrawal as the competent authorities of the host soon as possible and at the latest within Member State shall prepare for the

PE469.842v03-00 86/227 RR\906034EN.doc EN one month, by any appropriate means. supervision of the credit intermediary in accordance with Article 24 and, if necessary, indicate the conditions under which, in areas not harmonised in Union law, those activities shall be carried out in the host Member State. Competent authorities of different Member States shall cooperate with each other whenever necessary for the purpose of carrying out their duties under this Directive, making use of their powers whether set out in this Directive or in national law. Competent authorities shall render assistance to competent authorities of the other Member States. In particular, they shall exchange information and cooperate in any investigation or supervisory activities. The competent authorities may refer situations to the EBA where a request for cooperation, in particular to exchange information, has been rejected or has not been acted upon within a reasonable time, and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010. In such cases, the EBA may act in accordance with the powers conferred on it by that Article. 4. Where the host Member State has clear 4. Member States shall ensure that credit and demonstrable grounds for concluding intermediaries whose approval has been that a credit intermediary acting within its withdrawn are deleted from the register territory under the freedom to provide without undue delay. services or through a branch is in breach of the obligations set out in this Directive, it shall refer those findings to the competent authority of the home Member State which shall take the appropriate measures. In cases where, despite measures taken by the competent authority of the home Member State, a credit intermediary persists in acting in a manner that is clearly prejudicial to the interests of host Member State consumers or the orderly functioning of markets, the following shall apply: (a) The competent authority of the host Member State, after informing the competent authority of the home Member

RR\906034EN.doc 87/227 PE469.842v03-00 EN State shall take all the appropriate measures needed in order to protect consumers and the proper functioning of the markets including by preventing the offending credit intermediaries from initiating any further transactions within their territories. The Commission shall be informed of such measures without undue delay. (b) In addition, the competent authority of the host Member State may refer the matter to the EBA and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010. In that case, the EBA may act in accordance with the powers conferred on it by that Article.

Amendment 99

Article 22a Supervision of credit intermediaries and appointed representatives 1. Member States shall ensure that credit intermediaries are subject to supervision of their ongoing activities by the competent authorities of the home Member State. 2. Where a home Member State allows appointed representatives as referred to in Article 19a those appointed representatives shall be subject to supervision either directly or as part of the supervision of the credit intermediary on behalf of which it acts. 3. Where a credit intermediary has a branch in a Member State other than its home Member State, the competent authority of the Member State in which the branch is located shall assume responsibility for ensuring that the services provided by the branch within its territory comply with the obligations laid

PE469.842v03-00 88/227 RR\906034EN.doc EN down in Article 5(1) and Articles 6, 7, 8, 9, 9a, 10, 11, 15, 17 and 25 and in measures adopted pursuant thereto. 4. The competent authority of the Member State in which the branch is located shall have the right to examine branch arrangements and to request such changes as are strictly needed to enable the competent authority to enforce the obligations under Article 5(1) and Articles 6, 7, 8, 9, 9a, 10, 11, 12, 15, 17 and 25 and measures adopted pursuant thereto with respect to the services and/or activities provided by the branch within its territory. 5. Where the competent authorities of a host Member State ascertain that a credit intermediary that has a branch within its territory is in breach of the legal or regulatory provisions adopted in that State pursuant to those provisions of this Directive which confer powers on the host Member State's competent authorities, those authorities shall require the credit intermediary concerned to put an end to its irregular situation. If the credit intermediary concerned fails to take the necessary steps, the competent authorities of the host Member State shall take all appropriate measures to ensure that the credit intermediary concerned puts an end to its irregular situation. The nature of those measures shall be communicated to the competent authorities of the home Member State. If, despite the measures taken by the host Member State, the credit intermediary persists in breaching the legal or regulatory provisions referred to in the first subparagraph in force in the host Member State, the latter may, after informing the competent authorities of the home Member State, take appropriate measures to prevent or to penalise further irregularities and, in so far as necessary, to prevent the credit intermediary from initiating any further transactions within its territory. The Commission shall be

RR\906034EN.doc 89/227 PE469.842v03-00 EN informed of such measures without undue delay. Where the competent authority of the home Member State disagrees with such measures taken by the host Member State, it may refer the matter to the EBA and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010. In that case, the EBA may act in accordance with the powers conferred on it by that article. 6. In cases where the authorisation of credit intermediaries is withdrawn by the home Member State that home Member State shall notify the host Member State(s) and EBA of such withdrawal as soon as possible and at the latest within one month, by any appropriate means. Competent authorities of different Member States shall cooperate with each other and with EBA whenever necessary for the purpose of carrying out their duties under this Directive, making use of their powers whether set out in this Directive or in other Union or national law. Competent authorities shall render assistance to competent authorities of the other Member States. In particular, they shall exchange information and cooperate in any investigation or supervisory activities. The competent authorities may refer situations to the EBA where a request for cooperation, in particular to exchange information, has been rejected or has not been acted upon within a reasonable time, and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010. In such cases, the EBA may act in accordance with the powers conferred on it by that Article. 7. Where the competent authority of the host Member State has clear and demonstrable grounds for concluding that a credit intermediary acting within its territory under the freedom to provide services is in breach of the obligations set

PE469.842v03-00 90/227 RR\906034EN.doc EN out in this Directive or that a credit intermediary that has a branch within its territory is in breach of the obligations for which the competent authority of the host Member State does not have powers under paragraph 3 or 4, it shall refer those findings to the competent authority of the home Member State which shall take the appropriate measures. In cases where the competent authority of the home Member State fails to take any measures within one month of obtaining those findings or where, despite measures taken by the competent authority of the home Member State, a credit intermediary persists in acting in a manner that is clearly prejudicial to the interests of host Member State consumers or the orderly functioning of markets, the following shall apply: (a) The competent authority of the host Member State, after informing the competent authority of the home Member State shall take all the appropriate measures needed in order to protect consumers and the proper functioning of the markets including by preventing the offending credit intermediaries from initiating any further transactions within their territories. The Commission and EBA shall be informed of such measures without undue delay. (b) In addition, the competent authority of the host Member State may refer the matter to the EBA and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010. In that case, the EBA may act in accordance with the powers conferred on it by that Article. 8. Each Member State shall provide that, where a credit intermediary authorised in another Member State has established a branch within its territory, the competent authorities of the home Member State of the credit intermediary, in the exercise of its responsibilities and after having informed the competent authorities of the host Member State, may carry out on-site

RR\906034EN.doc 91/227 PE469.842v03-00 EN inspections in that branch. 9. The allocation of tasks between Member States specified in this Article is without prejudice Article 4 and to the host Member State's powers in relation to fields not covered by this Directive, consistent with their obligations under Union law.

Amendment 100

1. Without prejudice to procedures for the Member States shall impose sanctions for withdrawal of authorisation or to the infringements of the national provisions right of Member States to impose adopted on the basis of this Directive and criminal sanctions, Member States shall shall take all measures necessary to ensure, in conformity with their national ensure that they are implemented. Those law, that appropriate administrative sanctions shall be effective, proportionate measures can be taken or administrative and dissuasive. sanctions imposed against persons responsible where the provisions adopted in the implementation of this Directive have not been complied with. Member States shall ensure that these measures are effective, proportionate and dissuasive.

Justification

Alignment with Article 23 of the Consumer Credit Directive.

Amendment 101

Member States shall provide for penalties deleted in particular cases where consumers knowingly provide incomplete or incorrect information in order to obtain a positive creditworthiness assessment where the complete and correct information would have resulted in a

PE469.842v03-00 92/227 RR\906034EN.doc EN negative creditworthiness assessment, and are subsequently unable to fulfil the conditions of the agreement, and shall take all measures necessary to ensure that they are implemented.

Justification

Amendment 102

1. Member States shall ensure that 1. Member States shall ensure that appropriate and effective complaints and appropriate and effective out-of-court redress procedures are established for the dispute resolution procedures are put in out-of-court settlement of disputes place for the settlement of consumer concerning rights and obligations disputes concerning credit agreements, established under this Directive between using existing bodies where appropriate. creditors and consumers and between credit intermediaries and consumers, using existing bodies where appropriate. Member States shall further ensure that all creditors and credit intermediaries adhere to one or more such bodies implementing such complaint and redress procedures.

Justification

Amendment 103

2. Member States shall ensure that these 2. Member States shall encourage these bodies actively cooperate in the resolution bodies to cooperate so that cross-border of cross-border disputes. disputes concerning credit agreements can also be resolved.

Justification Alignment with Article 24 of the Consumer Credit Directive.

1. The powers to adopt delegated acts 1. The power to adopt delegated acts is referred to in Articles 6(4), 8(4), 9(3), conferred on the Commission subject to 10(3), 14(5) and 16(2) shall be conferred the conditions laid down in this Article. on the Commission for an indeterminate period of time following the entry into force of this Directive. 1a. The power to adopt delegated acts referred to in Article 9a(3) and Article 12(5) shall be conferred on the Commission for an indeterminate period of time. 2. As soon as it adopts a delegated act, the 2. The delegation of power referred to in Commission shall notify it simultaneously Article 9a(3) and Article 12(5) may be to the European Parliament and to the revoked at any time by the European Council. Parliament or by the Council. A decision to revoke shall terminate the delegation of the powers specified in that decision. It shall be published in the Official Journal of the European Union and shall take effect on the day following the publication of the decision in the Official Journal or at a later date specified therein. It shall not affect the validity of any delegated acts already in force. 3. The power to adopt delegated acts is 3. As soon as it adopts a delegated act, the conferred on the Commission subject to Commission shall notify it simultaneously the conditions laid down in Articles 27 to the European Parliament and to the and 28. Council. 3a. A delegated act adopted pursuant to Article 9a(3) and Article 12(5)shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and to the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. At

PE469.842v03-00 94/227 RR\906034EN.doc EN the initiative of the European Parliament or the Council that period shall be extended by three months.

Amendment 105

Article 27 deleted Revocation of the delegation 1. The delegation of powers referred to in Articles 6(4), 8(4), 9(3), 10(3), 14(5) and 16(2) may be revoked at any time by the European Parliament or by the Council. 2. The institution which has commenced an internal procedure for deciding whether to revoke the delegation of powers shall inform the other legislator and the Commission at the latest one month before the final decision is taken, stating the delegated powers which could be subject to revocation and the reasons for any revocation. 3. The decision of revocation shall terminate the delegation of the powers specified in that decision. It shall take effect immediately or at a later date specified therein. It shall not affect the validity of the delegated acts already in force. It shall be published in the Official Journal of the European Union.

Amendment 106

Article 28 deleted Objections to delegated acts 1. The European Parliament and the Council may object to a delegated act within a period of two months from the

RR\906034EN.doc 95/227 PE469.842v03-00 EN date of notification. At the initiative of the European Parliament or the Council that period shall be extended by one month. 2. Where, on expiry of the period referred to in paragraph 1, neither the European Parliament nor the Council has objected to the delegated act, it shall be published in the Official Journal of the European Union and shall enter into force on the date stated therein. The delegated act may be published in the Official Journal of the European Union and enter into force before the expiry of that period where the European Parliament and the Council have both informed the Commission of their intention not to raise objections. 3. Where either the European Parliament or the Council objects to an adopted delegated act within the period referred to in paragraph 1, it shall not enter into force. The institution which objects shall state the reasons for objecting to the delegated act.

Amendment 107

2. Member States shall further ensure deleted that the provisions they adopt in implementation of this Directive cannot be circumvented as a result of the way in which agreements are formulated, in particular by integrating credit agreements falling within the scope of this Directive into credit agreements the character or purpose of which would make it possible to avoid its application.

3. Member States shall take the necessary 3. Member States shall take the necessary measures to ensure that consumers do not measures to ensure that consumers do not lose the protection granted by this lose the protection granted by this Directive by virtue of the choice of the law Directive by virtue of the choice of the law of a third country as the law applicable to of a third country as the law applicable to the credit agreement. the credit agreement, if the credit agreement has a close link with the territory of one or more Member States.

Justification

Amendment 109

Article 30a Transitional Measures The Directive shall not apply to credit agreements existing on the date when the national implementing measures enter into force.

Amendment 110

The Commission shall undertake a review The Commission shall undertake a review five years after the entry into force of this five years after the entry into force of this Directive. The review shall consider the Directive. The review shall consider the effectiveness and appropriateness of the effectiveness and appropriateness of the provisions on consumers and the internal provisions on consumers and the internal market. market. (a) an assessment of consumer satisfaction (a) an assessment of compliance with the with the ESIS; ESIS and consumer use, understanding

RR\906034EN.doc 97/227 PE469.842v03-00 EN and satisfaction thereof; (b) other pre-contractual disclosures; (b) other pre-contractual disclosures; (c) an analysis of cross-border business by (c) an analysis of cross-border business by credit intermediaries and creditors; credit intermediaries and creditors; (d) an analysis of the evolution of the (d) an analysis of the evolution of the market for non-credit institutions providing market for non-credit institutions providing credit agreements relating to residential credit agreements relating to residential immovable property; immovable property; (e) an assessment on the need for further (e) an assessment on the need for further measures, including a passport for non- measures, including a passport for non- credit institutions providing credit credit institutions providing credit agreements relating to residential agreements relating to residential immovable property; immovable property; (f) an examination of the necessity to (f) an assessment of the functioning of the introduce rights and obligations with post-contractual stage of credit agreements; regard to the post-contractual stage of credit agreements; (g) an assessment of the need to extend its (g) an assessment of the scope of this scope to small companies. Directive in order to avoid the need for new legislation; (ga) an assessment of the impact of this directive on the market for other forms of credit including those which creditors or consumers may consider substitutable for those within its scope; (gb) an assessment of whether additional measures are necessary to ensure the traceability of credit agreements secured against residential immovable property; (gc) an assessment of the transparency and consistency of data on trends in prices of residential immovable property.

Amendment 111

Article 31a Further initiatives on responsible lending and borrowing By ...*, the Commission shall submit a comprehensive report assessing the wider

PE469.842v03-00 98/227 RR\906034EN.doc EN challenges of private over-indebtedness. The report shall identify the related markets, products and actors in the credit supply chain and analyse the different options to tackle these problems including macroeconomic measures related to credit evolution, its limits and uses, structural measures to protect savers in deposit institutions and measures addressed to highly leveraged institutions and to over- indebted households and consumers in difficulties and the consequent vulnerabilities in the financial system. The report shall be accompanied, where appropriate, by legislative proposals. ______* OJ please insert date: 12 months after the date of entry into force of this Directive.

Amendment 112

Proposal for a directive Annex 1 – Section I – paragraph 2 – point d

Text proposed by the Commission Amendment d) The result of the calculation shall be d) The result of the calculation shall be expressed with an accuracy of at least one expressed with an accuracy of at least one decimal place. If the figure at the following decimal place. If the figure at the following decimal place is greater than or equal to 5, decimal place is greater than or equal to 5, the figure at that particular decimal place the figure at the preceding decimal place shall be increased by one. shall be increased by one.

Amendment 113

Proposal for a directive Annex I – Section II – point j

(j) For credit agreements for which a fixed (j) For credit agreements for which a fixed borrowing rate is agreed in relation to the borrowing rate is agreed in relation to the initial period, at the end of which a new initial period, at the end of which a new borrowing rate is determined and borrowing rate is determined and subsequently periodically adjusted subsequently periodically adjusted according to an agreed indicator, the according to an agreed indicator, the calculation of the annual percentage rate calculation of the annual percentage rate shall be based on the assumption that, at shall be based on the assumption that, at

RR\906034EN.doc 99/227 PE469.842v03-00 EN the end of the fixed borrowing rate period, the end of the fixed borrowing rate period, the borrowing rate is the same as at the the borrowing rate is the same as at the time of calculating the annual percentage time of calculating the annual percentage rate, based on the value of the agreed rate, based on the value of the agreed indicator at that time. indicator at that time, but is not less than the fixed borrowing rate. For credit agreements with a fixed borrowing rate of at least an initial period of five years and especially where a new fixed rate agreement is planned to proceed the agreement and variable conditions are only agreed on to prepare for the case that a new fixed deal has not yet been agreed on, only the initial fixed borrowing rate is to be taken into account.

Amendment 114

Proposal for a directive Annex 2 – part A – table

1. Lender 1. Lender [Name] [Name] [Geographical address] [Telephone number] [E-mail address] [Web address] Supervisory authority: [Name and Web Supervisory authority: [Name and Web address of supervisory authority] address of supervisory authority] Contact person: [Full contact details of (Optional) Contact point contact person] (Where applicable) Intermediary: [Name, level of service provided ("We recommend, having assessed your needs, that you take out this mortgage"/"We are not recommending a particular mortgage for you. However, based on your answers to some questions, we are giving you information about this mortgage so that you can make your own choice"), remuneration] 2. Main features of the loan 2. Main features of the loan

PE469.842v03-00 100/227 RR\906034EN.doc EN Amount and currency of the loan granted: Amount and currency of the loan granted: [value][currency] [value][currency] Where applicable) "This loan is not in (Where applicable) "This loan is not in [national currency]" [national currency]" The total amount you will have to pay back in [national currency] could change. For example in the event that the value of [national currency] fell by 20 % relative to [credit currency], you would have to pay back a total of [insert amount in national currency]. (Where applicable) "The maximum you will have to pay back could be much more than this.” You will receive a warning and possibility to renegotiate the conditions if the credit amount reaches [insert amount in national currency]." (Where applicable) "The maximum you will have to pay back could be [insert amount in national currency]." Duration of the loan: [duration] Duration of the loan: [duration] [Type of loan] [Type of loan] [Type of applicable interest rate] [Type of applicable interest rate] Total amount to be reimbursed: Total amount to be reimbursed: [Maximum available loan amount (Where applicable) minimum value of the relative to the value of the property]: property required to borrow the illustrated amount) (Where applicable) [Security] (Where applicable) [Security] 3. Interest rate 3. Interest rate The APRC is the total cost of the loan The APRC is the total cost of the loan expressed as an annual percentage. The expressed as an annual percentage. The APRC is provided to help you to compare APRC is provided to help you to compare different offers. The APRC applicable to different offers. The APRC applicable to your loan is [APRC]. It comprises: your loan is [APRC]. It comprises: Interest rate [value in percentage] Interest rate [value in percentage] (Where applicable) Interest rate [value under best case scenario for variable interest rate]Interest rate [value under worst-case scenario for variable interest rate] (Where applicable) Interest rate [value 20 % drop of national currency scenario] (Where applicable) The actual amount

RR\906034EN.doc 101/227 PE469.842v03-00 EN you will have to pay in total or every [enter period] may differ heavily from the figure expressed by the APRC. Therefore the APRC is calculated as an example under different assumptions. [Other components of the APRC] [Other components of the APRC] 4. Frequency and number of payments 4. Frequency and number of payments Repayment frequency: [frequency] Repayment frequency: [frequency] Number of payments: [number] Number of payments: [number] 5. Amount of each instalment 5. Amount of each instalment [Amount] [currency] [Amount] [currency] (Where applicable) The exchange rate used (Where applicable) The amount you have for converting your repayment in [credit to pay in [national currency] could currency] to [national currency] will be the change. For example, if the value of rate published by [name of institution [national currency] fell by 20 % relative publishing exchange rate] on [date]. to [credit currency] you would have to pay an extra [insert amount] each [insert period]. Your payments could increase by much more than this. The exchange rate used for converting your repayment in [credit currency] to [national currency] will be calculated on [date] using [insert name of benchmark or method of calculation]. (Where applicable) Because the interest rate on [part of] this loan can vary, the amount of your instalments could change. [Warning on the variability of the instalments and scenarios pursuant to Article 18a(5) illustrating the impact of interest rate changes] (Where applicable) The maximum you might have to pay each [insert period] could be [insert amount in national currency] (Where applicable) [Warnings for interest only loans secured by mortgages or comparable securities, details on tied savings products, deferred-interest loans as listed in Part B Section 5.] 6. Illustrative repayment table 6. (Where applicable) Illustrative repayment table This table shows the amount to be paid This table shows the amount to be paid every [frequency]. every [frequency]. The instalments (column [relevant no.]) are The instalments (column [relevant no.]) are

PE469.842v03-00 102/227 RR\906034EN.doc EN the sum of interest paid (column [relevant the sum of interest paid (column [relevant no.]), capital paid (column [relevant no.]) no.]), where applicable, capital paid and, where applicable other costs (column (column [relevant no.]) and, where [relevant no.]). Where applicable, The applicable other costs (column [relevant costs in the other costs column relate to no.]). Where applicable, The costs in the [list of costs]. Outstanding capital (column other costs column relate to [list of costs]. [relevant no.]) is the amount of the loan Outstanding capital (column [relevant no.]) that remains to be reimbursed after each is the amount of the loan that remains to be instalment. reimbursed after each instalment. [Amount and currency of the loan] [Duration of the loan] [Interest rate] [Table] [Table] (Where applicable) [Warning on the variability of the instalments] 7. Additional obligations and costs 7. Additional obligations and costs The borrower must comply with the The borrower must comply with the following obligations in order to benefit following obligations in order to benefit from the lending conditions described in from the lending conditions described in this document. this document. [Obligations] [Obligations] (Where applicable) Please note that the (Where applicable) Please note that the lending conditions described in this lending conditions described in this document (including the interest rate) may document (including the interest rate) may change if these obligations are not change if these obligations are not complied with. complied with. In addition to the costs already included in In addition to the costs already included in the [frequency] instalments, this loan the [frequency] instalments, this loan entails the following costs: entails the following costs: Costs to be paid on a one-off basis Costs to be paid on a one-off basis Costs to be paid regularly Costs to be paid regularly Please make sure that you are aware of all Please make sure that you are aware of all other taxes and costs (e.g. notary fees) other taxes and costs (e.g. notary fees, associated with this loan. registration fees, valuation fees [where not already included above] and taxes) associated with this loan. 8. Early repayment 8. Early repayment (Where applicable) You do not have the possibility to repay this loan early. (Where applicable) You have the You have the possibility to repay this loan possibility to repay this loan early, either early, either fully or partially. fully or partially.

RR\906034EN.doc 103/227 PE469.842v03-00 EN (Where applicable) [Conditions] (Where applicable) [Conditions] [Procedure] [Procedure] (Where applicable) Exit charge: (Where applicable) Exit charge: [insert amount or method of calculation] (Where applicable) Should you decide to (Where applicable) You have the right to repay this loan early, please contact us to transfer this loan to another lender. ascertain the exact level of the exit charge [Insert conditions] at that moment. (Where applicable) You do not have the possibility to transfer this loan to another property (Where applicable) You have the possibility to transfer this loan to another property: [Insert Conditions] (Where applicable): You have the right to convert the loan into [national currency]. [Insert conditions] (Where applicable) 9. Right of withdrawal (Where applicable) 9. Right of withdrawal For a period of [length of withdrawal For a period of [length of withdrawal period] after the signing of the credit period] after the signing of the credit agreement, the borrower may exercise his agreement, the borrower may exercise his right to cancel the agreement. right to cancel the agreement. (Where applicable): [Conditions] [Insert procedure] 10. Internal complaint scheme 10. Complaints [Name of the relevant department] If you have a complaint please [insert contact point or source of information on procedure] [Geographical address] If we do not resolve the complaint to your satisfaction, you can contact: [insert name of organisation] [Telephone number] [E-mail address] Contact person: [contact details] 11. External complaint body In the event of disagreement with the lender which remains unresolved the borrower has the possibility to address a complaint to: [Name of the complaint body] [Geographical address]

PE469.842v03-00 104/227 RR\906034EN.doc EN [Telephone number] [E-mail address] 12. Non-compliance with the commitments 11. Non-compliance with the commitments linked to the loan: consequences for the linked to the loan: consequences for the borrower borrower [Types of non-compliance] [Types of non-compliance] [Financial and/or legal consequences] [Financial and/or legal consequences] Should you encounter difficulties in Should you encounter difficulties in making your [frequency] payments, we making your [frequency] payments, we invite you to contact us as quickly as invite you to contact us as quickly as possible to explore possible solutions. possible to explore possible solutions. (Where applicable) 13. Additional (Where applicable) 12. Additional information in the case of distance information marketing (Where applicable) The law taken by the (Where applicable) Additional features: creditor as a basis for the establishment [insert explanation of additional features of relations with you before the listed in Part B and, optionally, any other conclusion of the credit contract is features offered by the lender as part of [applicable law]. the credit agreement not mentioned in previous sections]. Information and contractual terms will be (Where the language envisaged differs supplied in [language]. With your consent, from the language of the ESIS) we intend to communicate in [language/s] Information and contractual terms will be during the duration of the credit agreement. supplied in [language]. With your consent, we intend to communicate in [language/s] during the duration of the credit agreement. 14. Risks and warnings 13. Risks and warnings • We draw your attention to the risks • We draw your attention to the risks involved in taking out a mortgage loan. involved in taking out a mortgage loan. • (Where applicable) The interest rate of • (Where applicable) The interest rate of this loan does not remain fixed during the this loan does not remain fixed during the whole duration of the loan. whole duration of the loan. • (Where applicable) This loan is not in • (Where applicable) This loan is not in [national currency]. Please note that the [national currency]. Please note that the amount in [national currency] that you will amount in [national currency] that you will need to pay at each instalment will vary in need to pay at each instalment will vary in line with the [loan’s currency/national line with the [loan’s currency/national currency] exchange rate. currency] exchange rate. • (Where applicable) This is an interest- • (Where applicable) This is an interest- only loan. This means that, during its only loan. This means that, during its duration, you will need to build up enough duration, you will need to build up enough capital in order to reimburse the loan capital in order to reimburse the loan amount at maturity. amount at maturity. • You will also need to pay other taxes and • You will also need to pay other taxes and

RR\906034EN.doc 105/227 PE469.842v03-00 EN costs (where applicable), e.g. notary fees. costs (where applicable), e.g. notary fees. • Your income may change. Please make • Your income may change. Please make sure that if your income falls you will still sure that if your income falls you will still be able to afford your [frequency] be able to afford your [frequency] repayment instalments repayment instalments • (Where applicable) Your home may be • (Where applicable) Your home may be repossessed if you do not keep up with repossessed if you do not keep up with payments. payments.

Amendment 115

Proposal for a directive Annex 2 – part B

In completing the ESIS, the following In completing the ESIS, the following instructions shall be followed: instructions shall be followed: Section 'Introductory text' Section 'Introductory text' (1) The validity date shall be properly (1) The validity date shall be properly highlighted. highlighted. Section 'Introductory text' Section 'Introductory text' (1) The validity date shall be properly (1) The validity date shall be properly highlighted. highlighted. Section '1. Lender' Section 1: 'Lender' (1) Name, telephone number, (1) The relevant authority for the geographical address and web address of supervision of lending activities shall be the creditor shall refer to the creditor’s indicated. headquarters. The relevant authority for the supervision of lending activities shall be indicated. (2) Information on the contact person is (2) Information on a means to contact the optional. lender is optional. (3) In line with Article 3 of Directive (3) Where the product information is 2002/65/EC, where the transaction is being provided to the consumer by an being offered at a distance, the creditor intermediary, that intermediary shall give shall indicate, where applicable, the name its name and inform the consumer and geographical address of its whether it is providing information on the representative in the Member State of product as part of an advice service or residence of the borrower. Indication of not. It will also explain how it is being the telephone number, e-mail address and remunerated. If it is receiving commission web address of the representative of the from a creditor, the amount and the name credit provider is optional. of the creditor should be provided. (4) In line with Article 3 of Directive 2002/65/EC, where the transaction is

PE469.842v03-00 106/227 RR\906034EN.doc EN being offered at a distance, the creditor shall indicate the name of the trade register in which the creditor is entered and its registration number or an equivalent means of identification in that register. Section '2. Main features of the loan' Section 2: 'Main features of the loan' (1) The duration of the credit shall be (1) The duration of the credit shall be indicated in years or months, whichever is indicated in years or months, whichever is the most relevant. Where the duration of the most relevant. Where the duration of the credit can vary during the life of the the credit can vary during the life of the contract, the creditor shall explain when contract, the creditor shall explain when and under which conditions this can occur. and under which conditions this can occur. The description of the type of credit shall (2) The description of the type of credit clearly indicate how the capital and the shall clearly indicate how the capital and interest shall be reimbursed during the life the interest shall be reimbursed during the of the credit (i.e. constant, progressive or life of the credit (i.e. constant, progressive regressive reimbursements). or regressive reimbursements) and specify whether the credit agreement is on a capital repayment or interest-only basis. (2) This section shall also explain whether (3) This section shall also explain whether the interest rate is fixed or variable and, the interest rate is fixed or variable and, where applicable, the periods during which where applicable, the periods during which it will remain fixed; the frequency of it will remain fixed; the frequency of subsequent revisions and the existence of subsequent revisions and the existence of limits to the interest rate variability, such limits to the interest rate variability, such as caps or floors. The formula used to as caps or floors. The formula used to revise the interest rate shall be explained. revise the interest rate shall be explained. The creditor shall also indicate where Where the credit currency is different from further information on the indices or the national currency, the creditor shall rates used in the formula can be found. include information on the formula used to Where the credit currency is different from calculate the exchange rate spreads and the the national currency, the creditor shall frequency of their adjustment. include information on the formula used to calculate the exchange rate spreads and the frequency of their adjustment (3) 'Total amount to be reimbursed' shall be (4) 'Total amount to be reimbursed' shall be calculated as the sum of the credit amount calculated as the sum of the credit amount and the total cost of the credit. and the total cost of the credit. (4) 'Maximum available loan amount (5) Where applicable, the minimum value relative to the value of the property' shall of the property required to borrow the indicate the loan-to-value ratio. This ratio illustrated amount should be stated. is to be accompanied by an example in absolute terms of the maximum amount that can be borrowed for a given property value. (5) Where the credit will be secured by a (6) Where the credit will be secured by a

RR\906034EN.doc 107/227 PE469.842v03-00 EN mortgage on the property or another mortgage on the property or another commonly used guarantee, the creditor commonly used guarantee, the creditor shall draw the borrower’s attention to this. shall draw the borrower’s attention to this. (7) Where loans are multi-part loans (e.g. part fixed rate, part variable rate), the information shall be given for each part of the loan. Section '3. Interest rate' Section '3. Interest rate' (1) In addition to the interest rate, all the (1) In addition to the interest rate, all the other costs contained in the APRC shall be other costs contained in the APRC shall be listed (name and equivalence in listed (name and equivalence in percentage). Where providing a percentage percentage). Where providing a percentage rate for each of those costs is not possible rate for each of those costs is not possible or does not make sense, the creditor shall or does not make sense, the creditor shall provide a global percentage rate. provide a global percentage rate. (2) Where loans are multi-part loans (e.g. part fixed rate, part variable rate), the information shall be given for each part of the loan. (3) Where the interest rate is subject to revision, the creditor should state any benchmark which is used to determine changes to the applicable interest rate and include: (1) where relevant, the applicable caps and floors; (2) an example of how the amount of the instalment would vary where the interest rate increases by 1% or by a higher percentage which may be further specified, where this is more realistic given the magnitude of normal changes to the interest rate, unless there is a cap on the interest rate which is lower than that this increase, and (3) where there is a cap, the instalment amount in the worst-case scenario. Section '4. Frequency and number of Section '4. Frequency and number of payments' payments' (1) Where payments are to be done on a (1) Where payments are to be done on a regular basis, the frequency of payments regular basis, the frequency of payments shall be indicated (e.g. monthly). Where shall be indicated (e.g. monthly). Where the frequency of payments will be the frequency of payments will be irregular, this shall be clearly explained to irregular, this shall be clearly explained to the borrower. The number of payments the borrower. The number of payments indicated shall cover the whole duration of indicated shall cover the whole duration of the credit. the credit. Section '5. Amount of each instalment' Section '5. Amount of each instalment'

PE469.842v03-00 108/227 RR\906034EN.doc EN (1) The loan currency shall be clearly (1) The loan currency shall be clearly indicated. indicated (2) Where the amount of the instalments (2) Where the amount of the instalments may change during the life of the credit, may change during the life of the credit, the creditor shall specify the period during the creditor shall specify the period during which that initial instalment amount will which that initial instalment amount will remain valid and when and how frequently remain valid and when and how frequently afterwards it will change. afterwards it will change. (3) Where the credit currency is different to (3) Where the credit agreement is a the borrower’s national currency, the foreign currency loan and where the creditor shall include numerical examples credit currency is different to the clearly showing how changes to the borrower’s national currency, the creditor relevant exchange rate may affect the shall include a numerical example clearly amount of the instalments. The illustrated showing how a 5 % reduction in the value exchange rate changes need to be of the borrower’s national currency realistic, symmetrical and include at least would affect the amount of the instalments the same number of unfavourable cases together with a prominent statement that as favourable cases. the borrower's national currency could decline by more than the amount assumed in this illustration. (4) Where the currency used for the (4) Where the currency used for the payment of instalments is different from payment of instalments is different from the credit currency, the exchange rate to the credit currency, the date at which the be used shall be clearly indicated. Such applicable exchange is calculated shall be indications shall include the name of the given and the basis on which it will be institution publishing the exchange and calculated. the moment at which the applicable exchange is calculated. (5) Where all or part of the loan is an interest-only loan, the following statement shall be inserted prominently at the end of this section "You will still owe [insert amount of loan on an interest-only basis] at the end of the mortgage term. You will need to make separate arrangements to repay this. When comparing the payments on this mortgage with a repayment mortgage , remember to add any money that you may need to pay into a separate savings plan to build up a lump sum to repay this amount." (6) If there is a requirement for the consumer to take out a tied savings product as a condition for being granted an interest-only loan secured by a mortgage or another comparable security, the details of this product, including the cost and frequency of any payments, must

RR\906034EN.doc 109/227 PE469.842v03-00 EN also be provided with the statement in (5). (7) Where the loan is a deferred-interest loan, there should be an explanation of: how and when deferred interest is added to the loan as a cash amount; and what the implications are for the consumer in terms of their remaining debt. (8) Where loans are multi-part loans (e.g. part fixed rate, part variable rate), the information shall be given for each part of the loan, and in total. Section '6. Illustrative repayment table' Section '6. Illustrative repayment table (1) Where the interest may vary during (1) This section shall be included where the life of the credit, the creditor shall the loan is a deferred interest loan, or indicate, after the reference to the interest where the repayment of principle is rate, the period during which that initial deferred for an initial period. interest rate will remain valid. (2) The table to be included in this section (2) The table to be included in this section shall contain the following columns: shall contain the following columns: 'repayment moment', 'amount of the 'repayment moment', 'amount of the instalment', 'interest to be paid per instalment', 'interest to be paid per instalment', 'other costs included in the instalment', 'other costs included in the instalment' (where relevant), 'capital repaid instalment' (where relevant), 'capital repaid per instalment' and 'outstanding capital per instalment' and 'outstanding capital after each instalment'. after each instalment'. (3) For the first repayment year the (3) For the first repayment year the information shall be given for each information shall be given for each instalment and a subtotal shall be indicated instalment and a subtotal shall be indicated for each of the columns at the end of that for each of the columns at the end of that first year. For the following years, the first year. For the following years, the detail can be provided on an annual basis. detail can be provided on an annual basis. An overall total row shall be added at the An overall total row shall be added at the end of the table and shall provide the total end of the table and shall provide the total amounts for each column. The total amount amounts for each column. The total amount paid by the borrower (i.e. the overall sum paid by the borrower (i.e. the overall sum of the 'amount of the instalment' column) of the 'amount of the instalment' column) shall be clearly highlighted and presented shall be clearly highlighted and presented as such. as such. (4) Where the interest rate is subject to (4) Where the interest rate is subject to revision and the amount of the instalment revision and the amount of the instalment after each revision is unknown, the creditor after each revision is unknown, the creditor may indicate in the repayment table the may indicate in the repayment table the same instalment amount for the whole same instalment amount for the whole credit duration. In such a case, the creditor credit duration. In such a case, the creditor shall draw that fact to the attention of the shall draw that fact to the attention of the borrower by visually differentiating the borrower by visually differentiating the amounts which are known from the amounts which are known from the

PE469.842v03-00 110/227 RR\906034EN.doc EN hypothetical ones (e.g. using a different hypothetical ones (e.g. using a different font, borders or shading). In addition, a font, borders or shading). In addition, a clearly legible text shall explain for which clearly legible text shall explain for which periods the amounts represented in the periods the amounts represented in the table may vary and why. The creditor table may vary and why. shall also include: (1) where relevant, the applicable caps and floors; (2) an example of how the amount of the instalment would vary where the interest rate increases or decreases by 1 % or by a higher percentage, where this is more realistic given the magnitude of normal changes to the interest rate and (3) where there is a cap, the instalment amount in the worst-case scenario. Section '7. Additional obligations and Section '7. Additional obligations and costs' costs' (1) The creditor shall refer in this section to (1) The creditor shall refer in this section to obligations such as the need to insure the obligations such as the need to insure the property, to purchase life insurance or to property, to purchase life insurance or to buy any other product or service. For each buy any other product or service. For each obligation, the creditor shall specify obligation, the creditor shall specify towards whom and by when the obligation towards whom and by when the obligation needs to be fulfilled. needs to be fulfilled. (2) The creditor shall also list each of the (2) The creditor shall also provide a costs by category, indicating their amount, disaggregated list of each of the costs by to whom they are to be paid and at what category, indicating their amount, to whom moment. Where the amount is not known, they are to be paid and at what moment. the creditor shall provide a possible range This does not have to include costs or an indication of how the amount will be incurred for breaches of contract calculated. obligations. Where the amount is not known, the creditor shall provide a possible range or an indication of how the amount will be calculated. Section '8. Early repayment' Section '8. Early repayment and flexibility' (1) Where the credit may be repaid early, (1) The creditor shall indicate under what the creditor shall indicate under what conditions, if any, the borrower can repay conditions, if any, the borrower can do so. the loan early, in full or in part. The The creditor shall also indicate the steps creditor shall also indicate the steps the the borrower should take in order to borrower should take in order to request request the early repayment. the early repayment. (2) Where an exit charge will be applied to (2) Where an exit charge will be applied to the early repayment, the creditor shall draw the early repayment in order to the borrower’s attention to this and indicate compensate the creditor and preserve its its amount. In cases where the amount of indemnity, the creditor shall draw the the exit charge would depend on different borrower’s attention to this and indicate its factors, such as the amount repaid or the amount. In cases where the amount of the

RR\906034EN.doc 111/227 PE469.842v03-00 EN prevailing interest rate at the moment of exit charge would depend on different the early repayment, the creditor shall factors, such as the amount repaid or the indicate how the exit charge will be prevailing interest rate at the moment of calculated. The creditor shall then provide the early repayment, the creditor shall at least two illustrative examples in order indicate how the exit charge will be to demonstrate to the borrower the level of calculated. The creditor shall then provide, the exit charge under different possible where applicable, the maximum amount scenarios. that the charge might be. (3) Where applicable, the creditor shall explain the conditions for transferring the loan to another creditor. (4) Where the consumer has the option of transferring their loan to another property, the conditions for doing this will be explained. (5) Where the loan is a foreign currency loan the creditor should state the right in Article -18a(1), and the conditions attached to exercise of that right in accordance with Article -18a(2) and (3). Where the income or assets on which the consumer is relying to repay the loan are in a different currency from that of the credit agreement or where the credit agreement is in a currency other than the national currency, the creditor shall state whether there is a right to convert the currency of the credit agreement and, if so, under what conditions. Section '9. Right of withdrawal' Section '9. Right of withdrawal' (1) Where a right of withdrawal exists, the (1) Where a right of withdrawal exists, the creditor shall specify the conditions to creditor shall specify the conditions to which this right is subject, the procedure which this right is subject, the procedure that the borrower will need to follow in that the borrower will need to follow in order to exercise this right, inter alia, the order to exercise this right, inter alia, the address to which the notification of address to which the notification of withdrawal should be sent, and the withdrawal should be sent, and the corresponding fees (where applicable). corresponding fees (where applicable). (2) In line with Article 3 of Directive (2) In line with Article 3 of Directive 2002/65/EC, where the transaction is being 2002/65/EC, where the transaction is being offered at a distance, the consumer shall be offered at a distance, the consumer shall be informed of the existence or absence of a informed of the existence or absence of a right of withdrawal. right of withdrawal. (3) In line with Article 5 of Directive (3) In line with Article 5 of Directive 85/577/EEC, where the transaction is being 85/577/EEC, where the transaction is being offered away from business premises, the offered away from business premises, the consumer shall be informed of the consumer shall be informed of the

PE469.842v03-00 112/227 RR\906034EN.doc EN existence of a right of withdrawal. existence of a right of withdrawal. Section '10. Internal complaint scheme' Section '10. Complaints' (1) Information on the contact person is (1) Insert a means of contacting the optional. organisation to complain or a link to the complaints procedure on the relevant page of a website or similar information source, plus the name of the relevant external body for out-of-court complaints and redress. Section '11. External complaint body' (1) In line with Article 3 of Directive 2002/65/EC, where the transaction is being offered at a distance, the creditor shall also specify whether or not there is an out-of-court complaint and redress mechanism for the borrower and, if so, explain the methods of access to it. Section '12. Non-compliance with the Section '11. Non-compliance with the consequences for the borrower': commitments linked to the credit: commitments linked to the credit: consequences for the borrower' (1) Where non-observance of any of the (1) Where non-observance of any of the borrower’s obligations linked to the credit borrower’s obligations linked to the credit may have financial or legal consequences may have financial or legal consequences for the borrower, the creditor shall describe for the borrower, the creditor shall describe in this section the different possible cases in this section the different possible cases (e.g. late payments/default, failure to (e.g. late payments/default, failure to respect the obligations set out in Section 7 respect the obligations set out in Section 7 'Additional obligations and costs'). 'Additional obligations and costs'). (2) For each of those cases, the creditor shall specify, in clear, easily comprehensible terms, the penalties or consequences to which they may give rise. Reference to serious consequences should be highlighted. Section '13. Additional information in the Section '12. Additional information' case of distance marketing' (1) Where applicable, this section will (1) The creditor shall state here whether it include a clause stipulating the law is compulsory for the consumer to hold applicable to the credit agreement and/or any ancillary services to obtain the credit the competent court. on the stated terms, and if so, whether the consumer is obliged to purchase them from the creditor's preferred supplier. Where the credit agreement is bundled with other products the credit shall state the key features of those other products and clearly state whether the consumer

RR\906034EN.doc 113/227 PE469.842v03-00 EN has a right to terminate the credit agreement and/or the bundled products separately and the conditions for and implications of doing so. (2) (Where Appropriate) Additional Features: Where the product contains any of the features listed in (4) below, this section must list these features and provide a brief explanation of: the circumstances in which the consumer can use the feature; any conditions attached to the feature; if the feature being part of the loan secured by a mortgage or comparable security means that the consumer loses any statutory or other protections usually associated with the feature; and the firm providing the feature (if not the creditor). (2) If the feature contains any additional credit, then this section must explain to the consumer: the total amount of credit (including the credit secured by the mortgage or comparable security); whether the additional credit is secured or not; the relevant interest rates; and whether it is regulated or not. (3) If the feature involves a savings vehicle, the relevant interest rate must be explained. (4) The possible additional features are: 'Underpayments'; 'Payment holidays'; 'Borrow back'; 'Incentives'; 'Additional borrowing available without further approval'; 'Additional secured borrowing'; 'Credit card'; 'Unsecured borrowing'; 'Linked current account'; and 'Linked savings account'. (5) The lender may also include any other features offered by the lender as part of the credit agreement not mentioned in previous sections. (6) Where the firm intends to communicate with the consumer during the life of the contract in a language different from the language of the ESIS that fact shall be included and the language of communication named.

PE469.842v03-00 114/227 RR\906034EN.doc EN Section '14. Risks and warnings' Section '13. Risks and warnings' (1) All the listed warnings shall be (1) All the listed warnings shall be highlighted. highlighted. (2) Where applicable, the creditor shall (2) Where applicable, the creditor shall recapitulate in this section the general recapitulate in this section the general interest rate revision rules and provide a interest rate revision rules and the risk to quantitative example of how the the consumer from interest rate increases instalments would increase if the credit’s in a clear, brief statement referring to the interest rate were to increase by X % (as quantitative example of how the explained in section 'Illustrative instalments would increase if the credit’s repayment table') and/or in the worst-case interest rate were to increase by X % in scenario (if there is a cap on the interest section 3(3). rate variability).

Amendment 116

Proposal for a directive Annex II a (new)

Annex IIa Minimum knowledge and competence requirements 1. The minimum knowledge and competence requirements for creditors’, credit intermediaries’ and appointed representatives’ staff should include at least: (a) appropriate knowledge of credit products secured by mortgages or other comparable securities and ancillary services typically offered together with such products; (b) appropriate knowledge of the laws related to the credit agreements for consumers including consumer protection; (c) appropriate knowledge and understanding of the property purchasing process; (d) appropriate knowledge of security valuation; (e) appropriate knowledge of organization and functioning of land registers;

RR\906034EN.doc 115/227 PE469.842v03-00 EN (f) appropriate level of financial and economic competency and knowledge of market context; (g) appropriate knowledge of business ethics standards; (h) appropriate competence in assessing consumers' creditworthiness, where applicable, or knowledge of the assessment process. 2. When establishing minimum knowledge and competence requirements Member States may differentiate between the levels and types of requirements applicable to the staff of creditors, the staff of credit intermediaries or appointed representatives and the management of credit intermediaries or appointed representatives. 3. Member States shall determine the basis for demonstrating an appropriate level of knowledge and competence. This may include professional qualifications or competency tests. Relevant professional experience may also be taken into account where there is evidence that performance is consistent with the standards required. However, the basis for demonstrating competence shall not solely consist of a minimum number of years working in areas related to the origination, distribution or intermediation of credit products.

PE469.842v03-00 116/227 RR\906034EN.doc EN EXPLANATORY STATEMENT

I. EU MORTGAGE MARKETS

Mortgages are often the most important and longest financial commitment a family makes. They are essential for access to house ownership (near 70% in the EU) and have great economic importance. In 2009, mortgage credit amounted to 6,126 EUR billion - 52.3% of EU GDP. The market grew from 1998 to 2009 in almost all Member States, though due to the crisis there has been a decline since 2008.

EU markets for retail mortgage credit are fragmented, cross-border activity is rare, although according to the European Central Bank it has doubled between 1997 and 2008, and concentration is increasing.

Significant differences between Member States have not translated into diversity within each country. Product diversity enables financial inclusion and more mature markets offer a wider range to meet consumers' preferences.

Concentration levels are not homogenous (data shows a negative correlation between the size of the market and concentration) but recent information shows concentration has increased such that, on average, the market share of the 5 biggest lenders in each Member State is over 75%.

The price of mortgage credit is the sum of the lenders' profit margin, distribution and management costs, funding costs and those costs arising from risk taking.

Lenders are generally credit institutions but in at least 5 Member States non-credit institutions represent up to 12%.

In most countries, creditors distribute directly through their network of branches. Indirect distribution is particularly important in Hungary, Ireland, the Netherlands and the United Kingdom. Experts found that lenders funded mainly through deposits have wide, direct distribution networks while those mostly funded through capital markets have limited distribution networks and more reliance on intermediaries.

In 2002 61% of mortgages were funded by deposits, 17.5% by covered bonds and 10% by residential mortgage backed securities. Alternatives to deposit-based funding allow the duration of the credit and the funding to be matched, facilitate portability of portfolios and are essential for developing cross-border financing of secondary markets. After the crisis, spreads between credits and deposits have widened.

The US subprime market was the epicentre of the crisis. The EU has been affected through exposure to derivatives, worsening financial conditions and widening economic imbalances. This helped burst the "housing bubble" in some Member States and created tensions in others that had assumed important credit risk in foreign currency.

The need to lend and borrow responsibly has increased since the crisis. The FSA's July 2010

RR\906034EN.doc 117/227 PE469.842v03-00 EN "Mortgage market review" recognizes that around 50% of all mortgages applications in 2007 and 2008 were processed without income verification and that "at the height of the market, almost 33% of all residential mortgages advanced in the UK were sold on an interest-only basis, with around three quarters of these having no specified repayment vehicle".

II. POLICY OBJECTIVE

Alongside the creation of the euro, the Financial Services Action Plan (1999) aimed to provide a modern financial framework which minimised the cost of capital and financial intermediation and ensured access to and security in retail markets.

Retail financial services market integration has been a goal since the FSAP, though not yet achieved. It is a prerequisite for fully benefitting from the internal market and an important contribution to growth. The Commission's 2007 White Paper on Mortgage Credit notes that "further integration of mortgage markets is essential for the European economy as well as for the functioning of the internal market".

Achieving the EU2020 goals of sustainable growth and learning lessons from the crisis in line with the G20 roadmap, demands an internal market for mortgage credit that is stable, resilient, efficient and open to competition. This requires sound underwriting practices, symmetrical relationships between the parties and good information for consumers; those conditions are also needed to promote financial inclusion and ensure a high level of consumer protection. Our goal should therefore be to achieve an internal market for mortgages in a sustainable way.

III. BETTER REGULATION

It is important to ensure that regulation at European level adds value. We should build on the existing acquis and keep coherence with the CCD (which some Member States have applied to mortgages) while acknowledging specificities due to the length and importance of mortgages.

Preserving subsidiarity and proportionality, we should remove internal market barriers but regard diversity at national level as an asset. Models that work and result from established legal and cultural traditions should be preserved. There is no case for full harmonisation and in most areas only a common basis should be established, leaving room for Member States to add national measures. In a few cases a ceiling may be needed to ensure market efficiency, providing a 'framed' harmonisation.

IV. THE COMMISSION'S PROPOSAL: OUR ASSESSMENT

Your Rapporteur was appointed in October 2010 following a 2009 consultation and 2010 working paper by the Commission on Responsible Lending and Borrowing. He then wrote to Commissioner Barnier stating that "irresponsible lending and borrowing was at the heart of excessive indebtedness, one of the main causes of the financial crisis" and calling for the scope of any proposal to be "broader than retail aspects of mortgage lending".

Once the limited scope of the proposal was confirmed, the ECON Committee Chair and your Rapporteur wrote again to the Commissioner explaining that "evidence shows that the main problems are not posed by defaults by consumers on loans related to residential property" and seeking "assurance that this proposal will be only the first step of a coherent EU strategy for

PE469.842v03-00 118/227 RR\906034EN.doc EN addressing the poor lending practices". Given Commissioner Barnier's commitment that the Commission "will not ignore these issues moving forward", your Rapporteur focused on the current proposal and has introduced a clause on "Further initiatives on responsible lending and borrowing".

Having met numerous stakeholders your Rapporteur believes the proposal is welcomed though it needs to be fine-tuned and complemented.

The proposal relates to conditions applicable to creditors and credit intermediaries, competent authorities and supervisory requirements. These need to be strengthened in a way coherent with the new European supervisory architecture. It also contains provisions on information and practices preliminary to the conclusion of the credit agreement, annual percentage rate of charge, creditworthiness assessment, database access, advice and early repayment. These need to reflect the principles of the Financial Stability Board's review of mortgage underwriting (2011) and take account of the US Dodd-Frank Act (2010) to promote global consistency.

The proposal should address other critical issues without delay: a risk based approach, financial education, sound performance and transparency. It is necessary to define a category of special risk agreements to correct excessive uniformity of regulation; to combat financial illiteracy at the root of irresponsible practices; to deal with key problems during the life of a credit agreement by guaranteeing flexibility through an enhanced balance of competition and stability; and to promote transparent, smart and reliable mortgage markets.

V. KEY ISSUES OF THE REPORT

Further initiatives on responsible lending and borrowing: As explained above, the Commission is asked to report on options to tackle excessive leverage, including macroeconomic measures related to credit evolution, its limits and uses, and measures to protect savers and address highly leveraged institutions to determine what other legislative proposals are needed.

Special risk agreements: this kind of agreement needs to be defined and the risks managed through extra measures including warnings for consumers and stricter prudential requirements so that those taking greater risks also bear the potential costs of taking such risks.

Creditworthiness assessment: this is key to achieving a sustainable market. The directive itself should reflect minimum standards recommended by the Financial Stability Board, even if these are further developed through technical standards. The assessment must be robust but to avoid financial exclusion, judgement should be used to protect consumers from arbitrary or unjustified decisions to deny credit.

Reflection period: consumers should have a time to compare offers and ask for advice. The report allows flexibility as to whether this is before or after conclusion of the contract, or a combination of the two.

Advice: It is important to define and provide clear standards for advice and to distinguish such advice, which includes a personalised recommendation, from personalised marketing material which does not contain such a recommendation. This includes ensuring remuneration does not inappropriately incentivise those providing advice.

RR\906034EN.doc 119/227 PE469.842v03-00 EN Early repayment: consumers should have the right to repay early, under certain conditions. A common European framework should be based in Member States legal traditions, and take account of different mortgage funding structures. The framework should ensure that consumers are not penalised for exercising their right and, consistent with Dodd Frank, that creditors are indemnified to a level consistent with market efficiency.

Valuation: Both creditors and consumers have an accurate and impartial valuation of the property. Valuation standards are proposed, and in the case of foreclosure coherence is assured with the value determined under the CRD.

Traceability: The crisis has shown the importance of ensuring the traceability of rights in residential immovable property for creditors and for those investing in instruments for which the right in the residential immovable property provides collateral. A European Mortgage Key Identifier should be allocated to new credit agreements ensuring that the link between the loan and the property can be identified in primary and secondary markets.

Local competent authorities: the Member State where the property is located should be able to determine standards applicable to loans related to property in their territory. Such standards should be applied through co-operation among competent authorities. Co-ordination at European level is needed, particularly relating to the identification and management of systemic risk.

PE469.842v03-00 120/227 RR\906034EN.doc EN 26.1.2012

OPINION OF THE COMMITTEE ON THE INTERNAL MARKET AND CONSUMER PROTECTION(*)

for the Committee on Economic and Monetary Affairs on the proposal for a directive of the European Parliament and of the Council on credit agreements relating to residential property COM(2011)0142 – C7-0085/2011 – 2011/0062(COD)

Rapporteur (*): Kurt Lechner

(*) Associated committee – Rule 50 of the Rules of Procedure

SHORT JUSTIFICATION

Although there is as yet no EU legislation on mortgage loans, the March 2001 Voluntary Code of Conduct on pre-contractual information for home loans (Commission Recommendation 2001/193/EC) is certainly relevant. And although the Consumer Credit Directive (2008/48/EC) does not apply to loans secured by a mortgage, Member States have implemented some of its provisions in connection with mortgage loans as well.

Mortgage credit markets are of major significance in the Single Market, but their degree of integration ranges from ‘little’ to ‘none at all’. In addition to the general problems that impede the contracting of cross-border loans – including consumer loans – such as language difficulties, differing financing cultures and the existence of specifically regional relationships of trust, the process of taking out mortgages is hampered by further obstacles, in particular major differences between Member States in the areas of land law, the rules on valuation, the law on land registers and mortgages and the law on foreclosure. These obstacles are not addressed in the proposal for a directive and there is no prospect of their being eliminated even in the medium term. The Commission is therefore correct in asserting that the scope for creating a single market, particularly on the consumer side, is extremely limited, and that any harmonisation should be cautious and should do no more than outline a possible framework. What is more, in view of the financial crisis, there are other initiatives relating to capital market legislation that take priority over this proposal.

From a consumer protection point of view, it should primarily be borne in mind that for many people buying a house is the biggest investment they make in their lives and therefore deserves protection. As a rule, people are aware of the implications of this transaction, seek out information and take advice. Consumer credit, by contrast, is more of a mass market with standardised products that can also be used across borders, and which bring with them the

RR\906034EN.doc 121/227 PE469.842v03-00 EN danger of inexperienced consumers being rushed into hasty decisions. In the case of residential property loans and mortgages, on the other hand, greater emphasis should be placed on maintaining product diversity, on the informed citizen's freedom to conclude contracts and on competition between suppliers. The consumer’s ability to ensure that his or her specific circumstances inform the individual contractual arrangements with the creditor, where appropriate with the assistance of an impartial adviser, should not be restricted by excessive regulation at European level, particularly since the cross-border impact is limited.

However, in spite of these differences between the sector covered by the Consumer Credit Directive and the proposed directive on residential property and mortgage credit agreements, care should be taken to ensure that, while the provisions of the two directives do not need to be identical, where the same subject matter is being regulated there should not be two different sets of rules on the same matters. Many Member States have implemented provisions of the Consumer Credit Directive in such a way that they also apply to loans secured by mortgages. This should be taken into account.

With a view to safeguarding the stability of the financial markets, there is no need for more stringent regulation than than provided by the Consumer Credit Directive, because measures that have already been adopted, e.g. those on bank supervision, capital requirements and securitisation, are also effective and more suited to this purpose. In that connection, your rapporteur draws attention to the Commission proposal of 20 July 2011 on implementing the recommendation of the Basel Committee on Banking Supervision (Basel III). Whereas in its Green and White Papers the Commission used the term ‘mortgage’, this proposal for a directive is entitled ‘directive on credit agreements relating to residential property’. This wording is misleading, as is Article 1. Although this is not immediately apparent, the proposal covers only consumer credit agreements, but its scope is by no means restricted to credit agreements relating to residential property, extending to all consumer credit agreements secured by immovable property, even when they are intended, for example, to fund the building of a large commercial complex or the purchase of a car or of shares, or as a bridging loan, which is entirely normal in some Member States.

AMENDMENTS

The Committee on the Internal Market and Consumer Protection calls on the Committee on Economic and Monetary Affairs, as the committee responsible, to incorporate the following amendments in its report:

Proposal for a directive Title

DIRECTIVE OF THE EUROPEAN DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL PARLIAMENT AND OF THE COUNCIL on credit agreements relating to residential on credit agreements relating to residential property property and credit agreements secured by mortgages (This amendment applies throughout the text. Adopting it will necessitate corresponding changes throughout.)

Amendment 2

(1) In March 2003, the Commission (1) In March 2003, the Commission launched a process to identify and assess launched a process to identify and assess the impact of barriers to the internal market the impact of barriers to the internal market for credit agreements relating to residential for credit agreements relating to residential immovable property. In 2007, it adopted a immovable property and credit White Paper on the integration of EU agreements secured by mortgages. In mortgage credit markets. The White Paper 2007, it adopted a White Paper on the announced the Commission’s intention to integration of EU mortgage credit markets. assess the impact of, among other things, The White Paper announced the the policy options for pre-contractual Commission’s intention to assess the information, credit databases, impact of, among other things, the policy creditworthiness, the annual percentage options for pre-contractual information, rate of charge and advice. The Commission credit databases, creditworthiness, the also established an Expert Group on Credit annual percentage rate of charge and Histories to assist the Commission in advice. The Commission also established preparing measures to improve the an Expert Group on Credit Histories to accessibility, comparability and assist the Commission in preparing completeness of credit data. Studies on the measures to improve the accessibility, role and operations of credit intermediaries comparability and completeness of credit and non-credit institutions providing credit data. Studies on the role and operations of agreements relating to residential credit intermediaries and non-credit immovable property and credit agreements institutions providing credit agreements secured by mortgages were also launched. relating to residential immovable property and credit agreements secured by mortgages were also launched.

(1a) Moreover, in its Communication entitled ‘Single Market Act: Twelve levers to boost growth and strengthen confidence’1, dated 13 April 2011, the Commission committed itself to further improving the ‘protection of borrowers in the mortgage market’. ______1 COM(2011)0206.

Amendment 4

(2) In accordance with the Treaty, the (2) In accordance with the Treaty, the internal market comprises an area without internal market comprises an area without internal frontiers in which the free internal frontiers in which the free movement of goods and services and the movement of goods and services and the freedom of establishment are ensured. The freedom of establishment are ensured. The development of a more transparent and development of a more transparent and efficient credit market within that area is efficient credit market within that area is vital to promote the development of cross- vital to promote the development of cross- border activity and create an internal border activity and create an internal market in credit agreements relating to market in credit agreements relating to residential immovable property. There are residential immovable property and credit substantial differences in the laws of the agreements secured by mortgages. There various Member States with regard to are substantial differences in the laws of conduct of business in the granting of the various Member States with regard to credit agreements relating to residential conduct of business in the granting of immovable property and in the regulation credit agreements relating to residential and supervision of credit intermediaries immovable property and credit and non-credit institutions providing credit agreements secured by mortgages and in agreements relating to residential the regulation and supervision of credit immovable property. Such differences intermediaries and non-credit institutions create obstacles that restrict the level of providing credit agreements relating to cross-border activity on the supply and residential immovable property and credit demand sides, thus reducing competition agreements secured by mortgages. Such and choice in the market, raising the cost of differences create obstacles that restrict the lending for providers and even preventing level of cross-border activity on the supply

PE469.842v03-00 124/227 RR\906034EN.doc EN them from doing business. and demand sides, thus reducing competition and choice in the market, raising the cost of lending for providers and even preventing them from doing business.

Amendment 5

(3) The financial crisis has shown that (3) The financial crisis has shown that irresponsible behaviour by market irresponsible behaviour by market participants can undermine the foundations participants can undermine the foundations of the financial system, leading to a lack of of the financial system, leading to a lack of confidence among all parties, in particular confidence among all parties, in particular consumers, and potentially severe social consumers, and potentially severe social and economic consequences. Many and economic consequences. Many consumers have lost confidence in the consumers have lost confidence in the financial sector and borrowers have found financial sector and borrowers have found their loans increasingly unaffordable, with their loans increasingly unaffordable, with defaults and forced sales rising. In view of defaults and forced sales rising. In view of the problems brought to light in the the problems brought to light in the financial crisis and in the context of efforts financial crisis and in the context of efforts to ensure an efficient and competitive to ensure an efficient and competitive internal market, the Commission has internal market that ensures financial proposed measures with regard to credit stability and consumer protection, the agreements relating to residential Commission has proposed measures with immovable property, including a reliable regard to credit agreements relating to framework on credit intermediation, in the residential immovable property, including context of delivering responsible and a reliable framework on credit reliable markets for the future and restoring intermediation, in the context of delivering consumer confidence. responsible and reliable markets for the future and restoring consumer confidence.

Amendment 6

(7) For those areas not covered by this (7) For those areas not covered by this Directive, Member States should be free to Directive, Member States should be free to maintain or introduce national legislation. maintain or introduce national legislation. Member States should be able to maintain Member States should be able in or introduce national provisions in areas particular to maintain or introduce national such as contract law relating to the validity provisions in areas such as contract law

RR\906034EN.doc 125/227 PE469.842v03-00 EN of credit agreements, property valuation, relating to the validity of credit land registration, contractual information, agreements, property law, property post-contractual issues, and handling valuation, land registration, contractual defaults. information, post-contractual issues, and handling defaults.

Amendment 7

(9) The objective of this Directive is to (9) The objective of this Directive is to ensure that all credits provided to ensure that all credits provided to consumers benefit from a high level of consumers benefit from a high level of protection. It should therefore apply to protection. It should therefore apply to credits secured by real estate, or credits credits secured by a mortgage, or which are used to purchase a property in consumer credit agreements which are some Member States and to credits for the used to finance properties in some renovation of residential property that are Member States and to credits for the not covered by Directive 2008/48/EC of renovation of residential property that are the European Parliament and of the not covered by Directive 2008/48/EC of Council of 23 April 2008 on credit the European Parliament and of the agreements for consumers and repealing Council of 23 April 2008 on credit Council Directive 87/102/EEC which lays agreements for consumers and repealing down rules at Union level concerning Council Directive 87/102/EEC which lays consumer credit agreements. Furthermore, down rules at Union level concerning this Directive should not be applied to consumer credit agreements. Furthermore, certain types of credit agreements where this Directive should not be applied to the credit is granted by an employer to his certain types of credit agreements where employees under certain circumstances, as the credit is granted by an employer to his already provided in Directive 2008/48/EC. employees under certain circumstances, as already provided in Directive 2008/48/EC.

Amendment 8

(9a) Furthermore, in accordance with Directive 2008/48/EC, this directive should not apply to credit agreements relating to residential immovable property, and credit agreements secured by mortgages, for sums in excess of EUR 2 million. The following should also be excluded from its scope: deferral

PE469.842v03-00 126/227 RR\906034EN.doc EN agreements, hiring or leasing agreements, credit agreements in the form of overdraft facilities, credit agreements where the credit is granted free of interest and without any other charges, credit agreements with investment firms, credit agreements which are the outcome of a settlement, credit agreements relating to deferred payment without charge, and credit agreements which relate to loans granted to a restricted public under a statutory provision.

Amendment 9

(16) The applicable legal framework (16) The applicable legal framework should give consumers the confidence that should give consumers the confidence that creditors and credit intermediaries are creditors and credit intermediaries are acting in the best interests of the consumer. acting in the best interests of the consumer. A key aspect of ensuring such consumer A key aspect of ensuring such consumer confidence is the requirement to ensure a confidence is the requirement to ensure a high degree of fairness, honesty and high degree of fairness, honesty and professionalism in the industry. While this professionalism in the industry. This Directive should require relevant Directive should require relevant knowledge and competence to be proven at knowledge and competence to be proven at the level of the institution, Member States the level of the institution as well as at the should be free to introduce or maintain level of the natural person in case of a such requirements applicable to credit intermediary who works alone. individual natural persons.

Justification

In order to protect consumers and guarantee equal conditions of competition, every person directly involved in marketing credit agreements, also as an intermediary, should be required to prove that they have the relevant knowledge and competence. This should also apply to intermediaries who work alone as natural persons and have no employees.

Amendment 10

(16a) Member States should take appropriate measures to facilitate and promote consumers’ understanding of their responsibilities with respect to borrowing and debt management, especially as regards credit agreements for residential immovable property. Member States should ensure that information is accessible to all consumers, so that the absence of such information does not serve to make consumers vulnerable who would otherwise not be, and should particularly ensure that consumers whose profiles make them especially vulnerable when it comes to the conclusion of credit agreements for residential immovable property are protected.

Amendment 11

(17) Creditors and credit intermediaries (17) Creditors and credit intermediaries frequently use advertisements, often frequently use advertisements, often featuring special terms and conditions, to featuring special terms and conditions, to attract consumers to a particular product. attract consumers to a particular product. Consumers should, therefore, be protected Consumers should, therefore, be protected against unfair or misleading advertising against unfair or misleading advertising practices and should be able to compare practices and should be able to compare advertisements. Specific provisions on the advertisements. Specific final provisions advertising of credit agreements relating to on the advertising of credit agreements residential immovable property and a list relating to residential immovable property of items to be included in advertisements and credit agreements secured by and marketing materials directed at mortgages, and a list of items to be consumers are necessary to enable them to included in advertisements and marketing compare different offers. Such provisions materials directed at consumers where take into account the specificities of credit such advertising specifies interest rates agreements relating to residential and costs, are necessary to enable them to immovable property, for instance, the fact compare different offers. For the rest, that if the loan repayments are not met, Member States should remain free to there is a risk of the consumer losing the provide for information requirements in property. Member States should remain their national laws. Such provisions free to introduce or maintain disclosure should take into account the specificities of

PE469.842v03-00 128/227 RR\906034EN.doc EN requirements in their national laws credit agreements relating to residential regarding advertising which does not immovable property. contain information on the cost of credit.

Amendment 12

(22) The consumer may still need (22) Despite the pre-contractual additional assistance in order to decide information to be provided, the consumer which credit agreement, within the range of may still need additional assistance in products proposed, is the most appropriate order to decide which credit agreement, for his needs and financial situation. within the range of products proposed, is Creditors, and where the transaction is the most appropriate for his needs and through a credit intermediary, credit financial situation. Therefore, Member intermediaries should provide such States should ensure that creditors provide assistance in relation to the credit products such assistance in relation to the credit which they offer to the consumer. The products which they offer to the consumer. relevant information, as well as the Where appropriate, the relevant pre- essential characteristics of the products contractual information, as well as the proposed, should therefore be explained to essential characteristics of the products the consumer in a personalised manner so proposed, should be explained to the that the consumer can understand the consumer in a personalised manner so that effects which they may have on his the consumer can understand the effects economic situation. Member States could which they may have on his economic determine when and to what extent such situation. Where applicable, this duty to explanations are to be given to the assist the consumer should also apply to consumer, taking into account the credit intermediaries. Member States particular circumstances in which the credit could determine when and to what extent is offered, the consumer’s need for such explanations are to be given to the assistance and the nature of individual consumer, taking into account the credit products. particular circumstances in which the credit is offered, the consumer’s need for assistance and the nature of individual credit products.

Amendment 13

(23) In order to promote the establishment (23) In order to promote the establishment and functioning of the internal market and and functioning of the internal market and to ensure a high degree of protection for to ensure a high degree of protection for consumers throughout the Union, it is consumers throughout the Union, it is

RR\906034EN.doc 129/227 PE469.842v03-00 EN necessary to ensure the comparability of necessary to uniformly ensure the information relating to annual percentage comparability of information relating to rates of charge throughout the Union. The annual percentage rates of charge total cost of the credit to the consumer throughout the Union. The total cost of the should comprise all the costs that the credit to the consumer should comprise all consumer has to pay in connection with the the costs that the consumer has to pay in credit agreement, except for notarial costs. connection with the credit agreement, It should therefore include interest, except for costs incurred in connection commissions, taxes, fees for credit with credit protection such as registration intermediaries and any other fees as well as fees and notarial costs. It should therefore the cost of insurance or other ancillary include interest, commissions, taxes, fees products, where these are obligatory in for credit intermediaries and any other fees order to obtain the credit on the terms and as well as the cost of insurance or other conditions marketed. As the annual ancillary products, where these are percentage rate of charge can at the pre- obligatory in order to obtain the credit on contractual stage be indicated only through the terms and conditions marketed. As the an example, such an example should be annual percentage rate of charge can at the representative. Therefore, it should pre-contractual stage be indicated only correspond, for instance, to the average through an example, such an example duration and total amount of credit granted should be representative. Therefore, it for the type of credit agreement under should correspond, for instance, to the consideration. Given the complexities of average duration and total amount of credit calculating an annual percentage rate of granted for the type of credit agreement charge (for instance, for credits based on under consideration. Given the variable interest rates or non-standard complexities of calculating an annual amortisation) and in order to be able to percentage rate of charge (for instance, for accommodate product innovation, credits based on variable interest rates or technical regulatory standards could be non-standard amortisation) and in order to employed to amend or specify the method be able to accommodate product of calculation of the annual percentage rate innovation, technical regulatory standards of charge. The definition of and could be employed to amend or specify the methodology used for calculating the method of calculation of the annual annual percentage rate of charge in this percentage rate of charge. In order to Directive should be the same as those in facilitate comparison, the aim should be Directive 2008/48/EC in order to facilitate to create uniformity as far as possible consumer understanding and between the definition of and comparison. Those definitions and methodology used for calculating the methodologies may, however, differ in the annual percentage rate of charge in this future should Directive 2008/48/EC be Directive and those in Directive modified at a later date. Member States 2008/48/EC. However, in the case of are free to maintain or introduce credits with a fixed initial interest rate, prohibitions on unilateral changes to the calculating the APCR in accordance with borrowing rate by the creditor. Directive 2008/48/EC may lead to serious misapprehensions among consumers. This should be corrected. Further discrepancies may arise in the future should the two directives be modified. Member States are free to maintain or introduce prohibitions on unilateral changes to the borrowing rate by the

PE469.842v03-00 130/227 RR\906034EN.doc EN creditor.

Amendment 14

(24) An assessment of creditworthiness (24) An assessment of creditworthiness should take into consideration all necessary should take into consideration all necessary factors that could influence a consumer's factors that could influence a consumer's ability to repay over the lifetime of the loan ability to repay over the lifetime of the loan including, but not limited to, the including, but not limited to, the consumer's income, regular expenditures, consumer's income, regular expenditures, credit score, past credit history, ability to credit score, past credit history, ability to handle interest rate adjustments, and other handle interest rate adjustments, and other existing credit commitments. Additional existing credit commitments. Additional provisions may be necessary to further provisions may be necessary to further elaborate on the different elements that elaborate on the different elements that may be taken into consideration in a may be taken into consideration in a creditworthiness assessment. Member creditworthiness assessment. The States may issue guidance on the method creditworthiness assessment should take and criteria to assess a consumer’s into account all relevant factors known to creditworthiness, for example by setting the creditor at the time of the application limits on loan-to-value or loan-to-income for the credit. ratios.

Justification

This would be better addressed by the Capital Requirements Directive.

Amendment 15

(25) A negative creditworthiness (25) A negative creditworthiness assessment should indicate to the creditor assessment should mean that the credit that the consumer is unable to afford the will be granted only in exceptional credit and as a consequence, the creditor circumstances. This should be should not grant the credit. Such a documented by the supervisory authority negative outcome may derive from a wide for auditing purposes. Such a negative range of reasons, including but not limited outcome may derive from a wide range of to the consultation of a database or a reasons, including but not limited to the negative credit score. A positive consultation of a database or a negative creditworthiness assessment should not credit score. A positive creditworthiness constitute an obligation for the creditor to assessment should not constitute an

RR\906034EN.doc 131/227 PE469.842v03-00 EN provide credit. obligation for the creditor to provide credit.

Amendment 16

(26) Consumers should provide all (26) Consumers should provide all available relevant information on their available relevant information on their financial situation and personal financial situation and personal circumstances to the creditor or circumstances to enable the creditor or intermediary in order to facilitate the intermediary to carry out the creditworthiness assessment. The creditworthiness assessment, since failure consumer should not, however, be to do so will result in refusal of the credit penalised where he is not in a position to they seek to obtain. In situations where provide certain information or consumers knowingly provide incomplete assessments of the future evolution of his or inaccurate information, Member States financial situation. In situations where should be able to determine the appropriate consumers knowingly provide incomplete penalties. or inaccurate information, Member States should be able to determine the appropriate penalties.

Amendment 17

(29) Where a decision to reject an (29) Where a decision to reject an application for credit is based on data application for credit is based on data obtained through the consultation of a obtained through the consultation of a database or the lack of data therein, the database or the lack of data therein, the creditor should inform the consumer creditor should inform the consumer thereof, of the name of the database thereof, of the name of the database consulted and of any other elements consulted and of any other elements required by Directive 95/46/EC so as to required by Directive 95/46/EC so as to enable the consumer to exercise his right to enable the consumer to exercise his right to access and, where necessary, rectify, erase access and, where necessary, rectify, erase or block personal data concerning him and or block personal data concerning him and processed therein. Where a decision to processed therein. Where a decision to reject an application for credit is based on reject an application for credit is based on an automated decision or on systematic an automated decision or on systematic methods such as credit scoring systems, the methods such as credit scoring systems, the creditor should inform the consumer creditor should inform the consumer thereof and explain the logic involved in thereof and of the arrangements enabling the decision and of the arrangements the consumer to request the automated

PE469.842v03-00 132/227 RR\906034EN.doc EN enabling the consumer to request the decision to be reviewed. However, the automated decision to be reviewed creditor should not be required to give such manually. However, the creditor should not information when to do so would be be required to give such information when prohibited by other Union legislation such to do so would be prohibited by other as legislation on money laundering or the Union legislation such as legislation on financing of terrorism. Neither should such money laundering or the financing of information be provided where to do so terrorism. Neither should such information would be contrary to the objectives of be provided where to do so would be public policy or public security such as the contrary to the objectives of public policy prevention, investigation, detection or or public security such as the prevention, prosecution of criminal offences. investigation, detection or prosecution of criminal offences.

Amendment 18

(31) In order to be in a position to (31) Where the consumer is provided with understand the nature of the service, advice as a service separate from the consumers should be made aware of what credit, he should be made clearly aware of constitutes a personalised this fact. A charge should only be made if recommendation on suitable credit the consumer is clearly informed about agreements for that consumer's needs the charge and the method of its and financial situation (‘advice’) and calculation. Those providing advice should when it is being provided and when it is comply with general standards in order to not. Those providing advice should comply ensure that the consumer is presented with with general standards in order to ensure a range of products suitable for his needs that the consumer is presented with a range and circumstances. That advice should be of products suitable for his needs and based on a fair and sufficiently wide- circumstances. That service should be ranging analysis of the products available, based on a fair and sufficiently wide- and on a close inspection of the consumer’s ranging analysis of the products available financial situation, preferences and on the market, and on a close inspection of objectives, and should be based on up-to- the consumer's financial situation, date information and reasonable preferences and objectives. Such an assumptions on the consumer’s assessment should be based on up-to-date circumstances during the lifetime of the information and reasonable assumptions on loan. If the advice relates only to the the consumer's circumstances during the adviser’s own range of products, this lifetime of the loan. Member States may should be drawn to the consumer’s clarify how the suitability of a given attention. Member States may clarify how product for a consumer should be assessed the suitability of a given product for a in the context of the provision of advice. consumer should be assessed in the context of the provision of advice.

Amendment 19

RR\906034EN.doc 133/227 PE469.842v03-00 EN Proposal for a directive Recital 32

(32) A consumer's ability to repay his (32) A consumer's ability to repay his credit prior to the expiry of his credit credit prior to the expiry of his credit agreement may play an important role in agreement may play an important role in promoting competition in the single market promoting competition in the single market and the free movement of EU citizens. and the free movement of EU citizens. However, substantial differences exist However, substantial differences exist between the national principles and between the national principles and conditions under which consumers have conditions under which consumers have the ability to repay and the conditions the ability to repay and the conditions under which such early repayment can take under which such early repayment can take place. Whilst recognising the diversity in place. Whilst recognising the diversity in mortgage funding mechanisms and the mortgage funding mechanisms and the range of products available, certain range of products available, certain standards with regard to early repayment of standards with regard to early repayment of credit are essential at Union level in order credit are essential at Union level in order to ensure that consumers have the to ensure that consumers have the possibility to discharge their obligations possibility to discharge their obligations before the date agreed in the credit before the date agreed in the credit agreement and the confidence to shop agreement and the confidence to shop around for the best products to meet their around for the best products to meet their needs. Member States should therefore needs. Member States should therefore ensure, either by legislation or by means of ensure, either by legislation or by means of contractual clauses, that consumers have a contractual clauses, that consumers have a statutory or contractual right to early statutory or contractual right to early repayment; nevertheless, Member States repayment; nevertheless, Member States should be able to define the conditions for should be able to define the conditions for the exercise of such a right. These the exercise of such a right. These conditions may include time limitations on conditions may include time limitations on the exercise of the right, different treatment the exercise of the right, different treatment depending on the type of the borrowing depending on the type of the borrowing rate, whether fixed or variable, restrictions rate, whether fixed or variable, restrictions with regard to the circumstances under with regard to the circumstances under which the right may be exercised. Member which the right may be exercised. Member States could also provide that the creditor States could also provide that the creditor should be entitled to fair and objectively should be entitled to fair and objectively justified compensation for potential costs justified compensation for potential costs directly linked to early repayment of the directly linked to early repayment of the credit. In any event, if the early repayment credit. In any event, if the early repayment falls within a period for which the falls within a period for which the borrowing rate is fixed, exercise of the borrowing rate is fixed, exercise of the right may be made subject to the existence right may be made subject to the existence of a special interest on the part of the of a legitimate interest on the part of the consumer. Such special interest may for consumer. Such legitimate interest may for example occur in case of divorce or example occur in case of divorce or unemployment. Where a Member State

PE469.842v03-00 134/227 RR\906034EN.doc EN chooses to lay down such conditions, unemployment. these should not make the exercise of the right excessively difficult or onerous for the consumer.

Amendment 20

(34) Credit intermediaries should be (34) Credit intermediaries should be registered with the competent authority of registered with the competent authority of the Member State where they have their the Member State where they have their residence or their head office, provided that residence or their head office, provided that they have been authorised in accordance they have been authorised in accordance with strict professional requirements in with strict professional requirements in relation to their competence, good repute, relation to their competence, good repute, and professional indemnity cover. With a and professional indemnity cover. With a view to promoting consumer confidence in view to promoting consumer confidence in credit intermediaries, Member States credit intermediaries, Member States should ensure that authorised credit should ensure that authorised credit intermediaries are subject to ongoing and intermediaries are subject to ongoing and thorough supervision by their home thorough supervision by their home Member State competent authority. Such Member State competent authority. Such requirements should apply at least at the requirements should apply at least at the level of the institution; however, Member level of the institution and at the level of States may clarify whether such the natural person in the case of a credit requirements for authorisation and intermediary who works alone; however, subsequent registration apply to individual Member States may clarify whether such employees within the credit intermediary. requirements for authorisation and subsequent registration apply to individual employees within the credit intermediary.

Amendment 21

(39) In order to take account of deleted developments in the markets for credit relating to residential immovable property or in the evolution of credit products as well as economic developments, such as inflation, and in order to provide further explanations on how to address certain of the requirements contained in this

RR\906034EN.doc 135/227 PE469.842v03-00 EN Directive, the Commission should be empowered to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the European Union. In particular, the Commission should be empowered to adopt delegated acts to specify the details concerning the professional requirements applicable to creditors’ staff and credit intermediaries, the criteria used for assessing the creditworthiness of the consumer and in ensuring that credit products are not unsuitable for the consumer, and further harmonisation of key terms such as ‘default’ the registration criteria and data processing conditions to be applied to credit databases.

Amendment 22

(40) In order to take account of (40) In order to take account of developments in the markets for credit developments in the markets for credit relating to residential immovable property, relating to residential immovable property, including the range of products available, including the range of products available, the Commission should be empowered to the Commission should be empowered to adopt delegated acts in accordance with adopt delegated acts in accordance with Article 290 of the Treaty on the Article 290 of the Treaty on the Functioning of the European Union to Functioning of the European Union to amend the content of the standard amend the content and format of the information items to be included in European Standardised Information Sheet advertising, the content and format of the (ESIS), and to amend the formula and the European Standardised Information Sheet assumptions used to calculate the annual (ESIS), the content of the information percentage rate of charge. disclosures by credit intermediaries, the formula and the assumptions used to calculate the annual percentage rate of charge and the criteria to be taken into account for the assessment of the consumer’s creditworthiness.

(41) In order to take account of economic deleted developments, such as inflation and developments in markets for credit agreements related to residential immovable property, the Commission should be empowered to stipulate the minimum monetary amount of the professional indemnity insurance or comparable guarantee with regard to credit intermediaries by adopting regulatory technical standards.

Amendment 24

(43) The European Parliament and the (43) The European Parliament and the Council should have two months from the Council should have three months from date of notification to object to a delegated the date of notification to object to a act. At the initiative of the European delegated act. At the initiative of the Parliament or the Council, it should be European Parliament or the Council, it possible to prolong that period by one should be possible to prolong that period month with regard to significant areas of by two months with regard to significant concern. It should also be possible for the areas of concern. It should also be possible European Parliament and the Council to for the European Parliament and the inform the other institutions of their Council to inform the other institutions of intention not to raise objections. their intention not to raise objections.

Amendment 25

The purpose of this Directive is to lay The purpose of this Directive is to lay down a framework for certain aspects of down a framework for certain aspects of the laws, regulations and administrative the laws, regulations and administrative provisions of the Member States provisions of the Member States and concerning credit agreements relating to concerning certain aspects of the prudential

RR\906034EN.doc 137/227 PE469.842v03-00 EN residential immovable property for and supervisory requirements for credit consumers and concerning certain aspects intermediaries and creditors where they of the prudential and supervisory relate to consumer credit agreements requirements for credit intermediaries and secured by a mortgageor by another creditors. comparable security or used to finance residential immovable property.

Amendment 26

Proposal for a directive Article 2 – paragraph 1 – introductory part

1. This Directive shall apply to the 1. This Directive shall apply to the following credit agreements: following consumer credit agreements:

Amendment 27

Proposal for a directive Article 2 – paragraph 1 – point a

(a) Credit agreements which are secured (a) Credit agreements the purpose of either by a mortgage or by another which is to acquire or retain rights in comparable security commonly used in a land or residential immovable property Member State on residential immovable and which are secured either by a property or secured by a right related to mortgage or by another comparable residential immovable property. security commonly used in a Member State on residential immovable property or secured by a right related to residential immovable property.

Justification

All Member States would apply the provisions of the directive to home loans which are secured by a mortgage or a comparable security. As regards other loans which fall within the scope of the Commission proposal, the Member States would have the right to choose whether to apply the provisions of this directive or the provisions of the Consumer Credit Directive to them.

Amendment 28

Proposal for a directive Article 2 – paragraph 1 – point b

(b) Credit agreements the purpose of deleted

PE469.842v03-00 138/227 RR\906034EN.doc EN which is to acquire or retain property rights in land or in an existing or projected residential building.

Amendment 29

Proposal for a directive Article 2 – paragraph 1 – point c

(c) Credit agreements the purpose of deleted which is the renovation of the residential immovable property a person owns or aims to acquire, which are not covered by Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008.

Amendment 30

(a) Credit agreements which will (a) Credit agreements where the creditor: eventually be repaid from the sale proceeds of an immovable property. (i) contributes a lump sum, periodic payments or other forms of credit disbursement in return for a sum deriving from the sale of an immovable property or a right relating to immovable property; and (ii) will not seek full repayment of the credit until the occurrence of one or more specified life events defined in Member States (equity release).

Justification

Alignment with the intention described in Recital 10.

Proposal for a directive Article 2 – paragraph 2 – point b a (new)

(ba) Credit agreements for a total amount of credit exceeding EUR 2 million.

Amendment 32

Proposal for a directive Article 2 – paragraph 2 – point b b (new)

(bb) Agreements to defer credit agreements for a period of no more than six months, where the borrowing rate for the deferral does not exceed the rate in the credit agreement.

Amendment 33

Proposal for a directive Article 2 – paragraph 2 – point b c (new)

(bc) Credit agreements where the immovable property is not predominantly used by the consumer for his residential purposes.

Justification

Commercial loans used to purchase property as an investment are very different to standard residential mortgages, and the consumer and creditor require difference information and protection. The risks and nature of such lending is very different from that of a mainstream residential mortgage. For example, repayment relates not to the creditworthiness of the individual consumer but to the rental income obtained.

Proposal for a directive Article 2 – paragraph 2 – point b d (new)

(bd) Hiring or leasing agreements where an obligation to purchase the object of the agreement is not laid down either by the agreement itself or by any separate agreement; such an obligation shall be deemed to exist if it is so decided unilaterally by the creditor.

Justification

Compare Article 2(2)(d) of the Consumer Credit Directive.

Amendment 35

Proposal for a directive Article 2 – paragraph 2 – point b e (new)

(be) Credit agreements where the credit must be repaid within 12 months of the conclusion of the agreement, if so requested by a Member State with reference to some or all of the provisions of this Directive.

Justification

A niche market exists for short-term mortgage finance which typically exists to 'bridge' a linked series of property transactions. It therefore enables the purchase of a new home while the consumer's existing property is being marketed. The bridging loan is then repaid from the sale proceeds for the existing home. The standards laid down in this directive are therefore not appropriate for this type of mortgage.

Amendment 36

Proposal for a directive Article 2 – paragraph 2 – point b f (new)

(bf) Credit agreements in the form of overdraft facilities.

Compare Article 2(2)(e) of the Consumer Credit Directive.

Amendment 37

Proposal for a directive Article 2 – paragraph 2 – point b g (new)

(bg) Credit agreements where the credit is granted free of interest and without any other charges and credit agreements under the terms of which the credit has to be repaid within three months and only insignificant charges are payable.

Justification

Compare Article 2(2)(f) of the Consumer Credit Directive.

Amendment 38

Proposal for a directive Article 2 – paragraph 2 – point b h (new)

(bh) Credit agreements concluded with organisations as defined in Article 2(5) of Directive 2008/48/EC, if so requested by a Member State with reference to some or all of the provisions of this Directive.

Justification

Alignment with the Consumer Credit Directive as regards credit unions, which play an important role in extending access to financial services to consumers who might otherwise be denied it.

Proposal for a directive Article 2 – paragraph 2 – point b i (new)

(bi) Credit agreements which are concluded with investment firms as defined in Article 4(1) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments or with credit institutions as defined in Article 4 of Directive 2006/48/EC for the purposes of allowing an investor to carry out a transaction relating to one or more of the instruments listed in Section C of Annex I to Directive 2004/39/EC, where the investment firm or credit institution granting the credit is involved in such transaction. ______1 OJ L 145, 30.4.2004, p. 1. 2 OJ L 177, 30.6.2006, p. 1.

Justification

Compare Article 2(2)(h) of the Consumer Credit Directive.

Amendment 40

Proposal for a directive Article 2 – paragraph 2 – point b j (new)

(bj) Credit agreements which are the outcome of a settlement reached in court or before another statutory authority.

Justification

Compare Article 2(2)(i) of the Consumer Credit Directive.

Proposal for a directive Article 2 – paragraph 2 – point b k (new)

(bk) Credit agreements which relate to the deferred payment, free of charge, of an existing debt.

Justification

Compare Article 2(2)(j) of the Consumer Credit Directive.

Amendment 42

Proposal for a directive Article 2 – paragraph 2 – point b l (new)

(bl) Credit agreements which relate to loans granted to a restricted public under a statutory provision with a general interest purpose, and at lower interest rates than those prevailing on the market or free of interest or on other terms which are more favourable to the consumer than those prevailing on the market and at interest rates not higher than those prevailing on the market.

Justification

Start-up loans serve to promote economic, social and environmental objectives and are granted under statutory conditions on terms more favourable than those prevailing on the market. In keeping with Article 2(1)(l) of the Consumer Credit Directive, they should be excluded from the scope of this directive.

Amendment 43

Proposal for a directive Article 3 – paragraph 1 – point d

(d) 'Ancillary service' means a financial (d) 'Ancillary service' means a financial service offered to the consumer by the service, required by the creditor - de jure

PE469.842v03-00 144/227 RR\906034EN.doc EN creditor or credit intermediary in or de facto - or by law and offered to the conjunction with the credit agreement; consumer by the creditor, or a credit intermediary or a third party in conjunction with the credit agreement.

Amendment 44

Proposal for a directive Article 3 – paragraph 1 – point e – introductory part

(e) ‘Credit intermediary’ means a natural Does not affect English version. or legal person who is not acting as a creditor and who, in the course of his trade, business or profession, for a fee, which may take a pecuniary form or any other agreed form of financial consideration:

Justification

Does not affect English version.

Amendment 45

Proposal for a directive Article 3 – paragraph 1 – point e – indent ii

(ii) assists consumers by undertaking (ii) assists consumers by undertaking preparatory work in respect of credit preparatory work and/or administration in agreements within the meaning of Article 2 respect of credit agreements within the other than as referred to in point (i); meaning of Article 2 other than as referred to in point (i); or

Justification

The addition of the word ‘or’ makes it clearer that a credit intermediary does not necessarily perform all of these activities. This is also what the definition of credit intermediary in the Consumer Credit Directive states.

Amendment 46

Proposal for a directive Article 3 – paragraph 1 – point k

(k) ‘Total cost of the credit to the (k) ‘Total cost of the credit to the

RR\906034EN.doc 145/227 PE469.842v03-00 EN consumer’ means the total cost of the credit consumer’ means the total cost of the credit to the consumer as defined in Article 3(g) to the consumer as defined in Article 3(g) of Directive 2008/48/EC; of Directive 2008/48/EC, except for notarial fees and registration fees for mortgage or another comparable security;

Amendment 47

Proposal for a directive Article 3 - point l a (new)

(la) ‘Total amount of credit’ means the ceiling or the total sums made available under a credit agreement, irrespective of whether they are paid to the consumer or to a third party.

Justification

Since the term is used in the proposal (Article 8(2)(d)), it should be defined; see also Article 3(1) of Directive 2008/48/EC.

Amendment 48

Proposal for a directive Article 3 – paragraph 1 – point n a (new)

(na) ‘Fixed borrowing rate’ means a single fixed borrowing rate applicable for the entire life or part of the life of the credit agreement.

Amendment 49

Proposal for a directive Article 3 – point r a (new)

(ra) ‘Residential immovable property’ means an item of immovable property intended primarily for residential purposes.

Since the term is used in the proposal, it should be defined.

Amendment 50

Member States shall designate the Member States shall designate the competent authorities empowered to ensure competent authorities empowered to ensure implementation of this Directive and shall implementation of this Directive and ensure that they are granted all the powers enactment of all its provisions in the necessary for the performance of their interest of the market and all market duties. participants. They shall ensure that they are granted sufficient resources and all the investigating and sanctioning powers necessary for the performance of their duties. Member States shall ensure that the competent authorities can access all premises, request the notification of mortgage contracts, ESIS, books, invoices and all other professional documents and obtain or take copies of these by any means and on all media and collect information and proof by means of summons or in situ. In the case of activity in a host Member State, supervision of the ongoing activities of creditors and credit intermediaries shall be performed by the competent authority of the host Member State. The competent authority of the home Member State shall be required to provide the competent authority of the host Member State with all relevant information. Competent authorities of the host Member State shall have the power to intervene if credit intermediaries fail to comply with their duties and responsibilities defined in this Directive. In addition, competent authorities of the host Member State shall be granted the right to refuse authorisations.

The competent authorities should be given the necessary competences in order to be able to act on behalf of consumers.

Amendment 51

Member States shall ensure that the Member States shall ensure that the authorities designated as competent for authorities designated as competent for ensuring the implementation of Articles 18, ensuring the implementation of Articles 18, 19, 20 and 21 of this Directive are one of 19, 20, 21, 22 and 23 of this Directive are those competent authorities included in one of those competent authorities included Article 4(2) of Regulation (EU) No in Article 4(2) of Regulation (EU) No 1093/2010 establishing a European 1093/2010 establishing a European Supervisory Authority (European Banking Supervisory Authority (European Banking Authority). Authority).

Amendment 52

2. Where there is more than one competent 2. Where there is more than one competent authority on its territory, a Member State authority on its territory, a Member State shall ensure that those authorities shall ensure that those authorities collaborate closely so that they can collaborate closely. discharge their respective duties effectively.

Amendment 53

1. Member States shall require that, when 1. Member States shall require that, when granting, intermediating or advising on granting, intermediating or advising on credit and, where appropriate, ancillary credit, the creditor or the credit services to consumers, the creditor or the intermediary acts honestly, fairly and credit intermediary acts honestly, fairly and professionally. professionally in accordance with the best interests of the consumer.

Rules governing ancillary services within the meaning of this directive, such as insurance, are laid down elsewhere. For that reason, the lex specialis principle should apply. Interests can be aligned and it is therefore not desirable to make specific reference to the best interests of the consumer.

Amendment 54

2. Member States shall ensure that the 2. Member States shall ensure that the manner in which creditors remunerate their manner in which creditors remunerate their staff and the relevant credit intermediaries staff and the relevant credit intermediaries and the manner in which credit and the manner in which credit intermediaries remunerate their staff do not intermediaries remunerate their staff do not impede compliance with the obligation to impede compliance with the obligation act in accordance with the best interests referred to in paragraph 1. of the consumer, as referred to in paragraph 1.

Amendment 55

(a) The staff of creditors and credit deleted intermediaries possess an appropriate level of knowledge and competence in relation to the offering or granting of credit agreements within the meaning of Article 2, or the activity of credit intermediation as defined in Article 3(e). Where the conclusion of a credit agreement includes an ancillary service related to it, in particular insurance or investment services, they shall also possess appropriate knowledge and competence in relation to that ancillary service in order to satisfy the requirements set out in Article 19 of Directive 2004/39/EC and Article 4 of Directive 2002/92/EC.

To protect consumers it is sufficient to regulate the competence requirements of the management who would then be responsible that staff is competent to perform their tasks. This solution would also be in line with other Union legislation. Regulating the minimum competence requirements of staff is excessive.

Amendment 56

(b) The natural persons within the (b) The natural persons within the management of creditors and credit management of creditors and credit intermediaries who are responsible for or intermediaries who are responsible for or have a role in the intermediation, advice or have a role in the intermediation, advice or approval of the credit agreement, possess approval of the credit agreement, possess appropriate knowledge and competence in appropriate knowledge and competence in relation to credit agreements. relation to credit agreements. The persons referred to in the first paragraph of this point shall be required to undergo continuous professional training to validate their knowledge and competence. The management of credit intermediaries shall ensure that staff members have an appropriate level of knowledge and competence to peform their tasks.

Amendment 57

Proposal for a directive Article 6 – paragraph 1 – point c

(c) Creditors and credit intermediaries are (c) Creditors and credit intermediaries are monitored in order to assess whether the supervised by the competent authority in requirements referred to in paragraph 1, order to assess whether the requirements points (a) and (b), are complied with on a referred to in paragraph 1, points (a) and continuing basis. (b), are complied with on a continuing basis.

Amendment 58

1a. Member States shall ensure that the minimum competence requirements referred to in paragraph 1 are established in accordance with the principles set out in Annex IIa.

Amendment 59

4. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to specify the requirements provided in paragraph 1 and 2 of this Article, and in particular, the necessary requirements for appropriate knowledge and competence.

Amendment 60

This obligation shall not apply where national legislation requires the indication of the annual percentage rate of charge in advertising concerning credit agreements which does not indicate an interest rate or any figures relating to any cost of credit to the consumer within the meaning of the first subparagraph.

Amendment 62

(b) that the product advertised is a credit deleted agreement and, where applicable, is secured either by a mortgage or another comparable security commonly used in a Member State on residential immovable property or by a right related to residential immovable property;

Justification

Mortgages are generally not sold directly on the basis of an advert. Market research shows that consumers retain very little information from mortgage advertising, so it is more effective to focus on a few key principles.

Amendment 63

(c) the borrowing rate, indicating whether (c) the borrowing rate, indicating whether this is fixed or variable or both, together this is fixed or variable or both, together with particulars of any charges included in with particulars of any charges included in the total cost of the credit to the consumer; the total cost of the credit to the consumer; the APRC should be included into the advertisement at least as prominently as any other numerical information;

Proposal for a directive Article 8 – paragraph 2 – subparagraph 1 – point f

Justification

Amendment 65

Justification

Amendment 66

(h) the total amount payable by the deleted consumer;

Amendment 67

(i) a warning, where applicable, deleted

RR\906034EN.doc 153/227 PE469.842v03-00 EN concerning the risk of losing the residential immovable property in the event of non-observance of the commitments linked to the credit agreement when the credit is secured by a mortgage or another comparable security commonly used in a Member State on residential immovable property or secured by a right related to residential immovable property.

Justification

Too detailed for inclusion on advertising material, and is not in keeping with the image of a responsible consumer.

Amendment 68

The standard information shall be easily The standard information shall be easily legible or clearly audible as appropriate, legible or clearly audible as appropriate, depending on the medium used for depending on the medium used for advertising and marketing. advertising and marketing. Any information provided throughout the advertising must adhere to the displayed representative example. Member States shall adopt criteria for defining a representative example.

Amendment 69

4. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to further specify the list of standard information items to be included in advertising. In particular, the Commission, when adopting such delegated acts shall amend, where necessary, the list of the standard

PE469.842v03-00 154/227 RR\906034EN.doc EN information items laid down in paragraphs 2(a) to (i) of this Article.

Amendment 70

Member States shall ensure that general Member States shall ensure that accessible information about credit agreements is and comprehensible general information made available by creditors or, where about credit agreements is made available applicable, credit intermediaries at all by creditors and provided to the consumer, times in a durable medium or in electronic either by the creditor in the case of direct form. sales, or through the credit intermediary, at all times on paper or on another durable medium and/or, upon request, in electronic form.

Justification

It is not clear who is responsible for drawing up this document. Intermediaries do not necessarily have access to all the relevant information. It should therefore be the responsibility of the creditor to provide this information to the intermediary or - when the creditor is distributing directly - directly to the consumer.

Amendment 71

(c) forms of surety; (c) forms of surety, including the possibility for the collateral to be located in a different Member State;

Amendment 72

(g) an indicative example of the total cost (g) a representative example of the total of credit for the consumer and annual cost of credit for the consumer and annual percentage rate of charge; percentage rate of charge;

Proposal for a directive Article 9 – paragraph 1 – subparagraph 2 – point g a (new)

(ga) an indication of possible additional costs, such as in connection with the registration of mortgages or other comparable securities;

Amendment 74

(i) whether there is a possibility of early (i) a description of the conditions attached repayment and, where applicable, a to early repayment; description of the conditions attached to early repayment;

Amendment 75

Proposal for a directive Article 9 – paragraph 1 – subparagraph 2 – point k

(k) details on how to obtain information deleted on tax relief on credit agreement interest or other public subsidies.

Justification

The requirement to provide these details conflicts with the image of a responsible consumer and could also constitute an obstacle to the Single Market. Also brings text into line with the Consumer Credit Directive.

Amendment 76

Proposal for a directive Article 9 – paragraph 1 – subparagraph 2 – point k a (new)

(ka) In the case of a credit agreement under which payments made by the

PE469.842v03-00 156/227 RR\906034EN.doc EN consumer do not give rise to an immediate corresponding amortisation of the total amount of credit, but are used to constitute capital during periods and under conditions laid down in the credit agreement or in an ancillary agreement, the pre-contractual information required under paragraph 2 shall include a clear and concise statement that such credit agreements do not provide for a guarantee of repayment of the total amount of credit drawn down under the credit agreement, unless such a guarantee is given.

Justification

Amendment 77

2. Member States shall ensure that the 2. In good time before the consumer is creditor and, where applicable, the credit bound by a credit agreement or offer, the intermediary, without undue delay after creditor and, where applicable, the credit the consumer has given the necessary intermediary shall, after the consumer has information on his needs, financial given the necessary information on his situation and preferences in accordance needs, financial situation and preferences with Article 14, provides the consumer in accordance with Article 14, provide the with the personalised information needed consumer, on the basis of the credit to compare the credits available on the conditions offered by the creditor and market, assess their implications and take where appropriate, of the preferences an informed decision on whether to expressed and details supplied by the conclude a credit agreement. Such consumer, with the personalised information, on paper or on another information needed to compare various durable medium, shall be provided by offers and take a reasoned decision on means of the European Standardised whether he wishes to conclude a credit Information Sheet (‘ESIS’), as set out in agreement. Annex II. Member States shall ensure that the creditor informs the consumer as to whether the European Standardised Information Sheet (ESIS) constitutes a binding offer, how long it remains valid and which of its elements may be

RR\906034EN.doc 157/227 PE469.842v03-00 EN changed.

Such information, on paper or on another durable medium, shall be provided free of charge by means of the ESIS, as set out in Annex II. Member States may decide that such information is to be provided in a different data sheet which shall include all the information that is provided for in the ESIS.

Member States shall ensure that when an Member States may stipulate that offer binding on the creditor is provided consumers should be afforded this scope to the consumer, it shall be accompanied to weigh up their decision through the by an ESIS. In such circumstances, granting of a statutory or contractual Member States shall ensure that the right of withdrawal pursuant to the credit agreement cannot be concluded provisions of Directive 2008/48/EC. until the consumer has had sufficient time to compare the offers, assess their implications and take an informed decision on whether to accept an offer, regardless of the means of conclusion of the contract. The creditor and, where applicable, the The creditor and, where applicable, the credit intermediary shall be deemed to credit intermediary shall be deemed to have fulfilled the requirements on have fulfilled the requirements on information provision to the consumer information provision to the consumer prior to the conclusion of a distance prior to the conclusion of a distance contract as set out in Article 3 of Directive contract as set out in Article 3 of Directive 2002/65/EC where they have supplied the 2002/65/EC where they have supplied the ESIS. ESIS. Any additional information which the The Member States may provide that the creditor or where applicable, the credit creditor shall supply additional intermediary, may provide to the consumer information to the consumer. This, shall be given in a separate document together with any additional information which may be annexed to the ESIS. which the creditor or where applicable, the credit intermediary, may provide voluntarily to the consumer, shall be given in a separate document which may be annexed to the ESIS.

Justification

Alignment with the Consumer Credit Directive. Furthermore, significant national differences may also make it necessary to provide different sets of information for the purpose of consumer protection.

Powers are delegated to the Commission in Powers are delegated to the Commission in accordance with Article 26 and subject to accordance with Article 26 to amend the the conditions of Articles 27 and 28, to standard information items laid down in amend the standard information items laid paragraph 1 of this Article and the content down in paragraph 1 of this Article and the and format of the ESIS set out in Annex II. content and format of the ESIS set out in Annex II.

Amendment 79

Proposal for a directive Article 9 – paragraph 3 – subparagraph 2 – point a

(a) amend the list of the standard deleted information items laid down in paragraph 1 of this Article;

Amendment 80

(b) delete any of the information items deleted laid down in Annex II;

Amendment 81

(c) make additions to the list of deleted information items laid down in Annex II;

Amendment 82

5. Member States shall ensure that the 5. Member States shall ensure that the creditor or credit intermediary, upon creditor or credit intermediary, upon request of the consumer, provides the request of the consumer, provides the consumer with a copy of the draft credit consumer with a copy of the draft credit agreement free of charge. This provision agreement free of charge. This provision shall not apply in cases where the creditor shall not apply in cases where the creditor is unwilling, at the time of the request, to is unwilling, at the time of the request, to proceed to the conclusion of the credit proceed to the conclusion of the credit agreement with the consumer. agreement with the consumer. Moreover, it is understood that all pre-contractual information should be given by the creditor or, where applicable, by credit intermediaries free of charge to the consumer.

Amendment 83

1. Prior to the performance of any of the 1. Prior to the performance of any of the services listed in Article 3(e), a credit services listed in Article 3(e), a credit intermediary shall provide the consumer intermediary shall provide the consumer with at least the following information: with at least the following information, free of charge:

Amendment 84

Proposal for a directive Article 10 – paragraph 1 – point h

(h) for those credit intermediaries that are (h) the existence of commissions or any not tied, the existence of commissions, other type of gratifications, including in where applicable, payable by the creditor kind, where applicable, payable by the to the credit intermediary for his services. creditor or any other third party to the credit intermediary for his services.

1a. Member States shall ensure that the fee, if any, payable by the consumer to the credit intermediary for his services is communicated to the creditor by the credit intermediary, for the purpose of calculation of the annual percentage rate of charge.

Justification

Compare Article 21(c) of the Consumer Credit Directive.

Amendment 86

3. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to update the list of information items on credit intermediaries to be provided to the consumer, as laid down in paragraph 1 of this Article. In particular, the Commission, when adopting such delegated acts shall amend, where necessary, the information items laid down in paragraph 1 of this Article.

Amendment 87

4. In order to ensure uniform conditions deleted of application of paragraph 1 of this Article, powers are conferred on the Commission to determine, where

RR\906034EN.doc 161/227 PE469.842v03-00 EN necessary, a standardised format and the presentation of the information items set out in paragraph 1 of this Article.

Amendment 88

Member States shall ensure that creditors Member States shall ensure that creditors and, where applicable, credit and, where applicable, credit intermediaries provide adequate intermediaries provide adequate explanations to the consumer on the explanations to the consumer, in order to proposed credit agreement(s) and any place the consumer in a position enabling ancillary service(s), in order to place the him to assess whether the proposed credit consumer in a position enabling him to agreement is adapted to his needs and assess whether the proposed credit financial situation, where appropriate by agreements are adapted to his needs and explaining the pre-contractual financial situation. An adequate information and the information from the explanation shall include the provision of ESIS, the essential characteristics of the personalised information on the products proposed and the specific effects characteristics of the credits on offer, they may have on the consumer, without however formulating any including the consequences of default in recommendation. Creditors and, where payment by the consumer. applicable, credit intermediaries shall accurately assess the level of knowledge and experience with credit of the consumer by any means necessary so as to enable the creditor or the intermediary to determine the level of explanations to be given to the consumer and adjust such explanations accordingly. Such adequate explanations shall include Member States may adapt the manner by an explanation of the information and which and the extent to which such terms included in the pre-contractual assistance is given, as well as by whom it information to be provided in accordance is given, to the particular circumstances with Articles 9 and 10 and of the of the situation in which the credit consequences that concluding the credit agreement is offered, the person to whom agreement may have for the consumer, it is offered and the type of credit offered. including in the event of default in payment by the consumer.

Justification

2. For the purpose of calculating the annual 2. For the purpose of calculating the annual percentage rate of charge, the total cost of percentage rate of charge, the total cost of the credit to the consumer shall be the credit to the consumer shall be determined excluding any charges payable determined excluding charges payable by by the consumer for non-compliance with the consumer for non-compliance with any any of his commitments laid down in the of his commitments laid down in the credit credit agreement. agreement. Where the opening of an account is The costs of maintaining an account obligatory in order to obtain the credit, the recording both payment transactions and costs of maintaining such an account, the drawdowns, the costs of using a means of costs of using a means of payment for both payment for both payment transactions and payment transactions and drawdowns on drawdowns, and other costs relating to that account, and other costs relating to payment transactions shall be included in payment transactions shall be included in the total cost of credit to the consumer the total cost of credit to the consumer, unless the opening of the account is unless the costs have been clearly and optional and the costs relating to the separately shown in the credit agreement or account have been clearly and separately in any other agreement concluded with the shown in the credit agreement or in any consumer. other agreement concluded with the consumer.

Justification

Amendment 90

4. In the case of credit agreements 4. In the case of credit agreements containing clauses allowing variations in containing clauses allowing variations in the borrowing rate and, where applicable, the borrowing rate and, where applicable, in the charges contained in the annual in the charges contained in the annual percentage rate of charge but percentage rate of charge but unquantifiable at the time of calculation, unquantifiable at the time of calculation, the annual percentage rate of charge shall the annual percentage rate of charge shall be calculated on the assumption that the be calculated on the assumption that the borrowing rate and other charges will be borrowing rate and other charges will be calculated at the level set at the signature calculated at the level set at the signature of the contract. of the contract. Where a fixed borrowing

RR\906034EN.doc 163/227 PE469.842v03-00 EN rate has been set for the initial period, the borrowing rate shall be no less than that initially determined rate. If the consumer names alternative ancillary services providers, the creditor and the credit intermediary shall recalculate the APRC on the basis of the costs of those ancillary services.

Justification

The current calculation method used in Directive 2008/48/EC may lead to significant misunderstandings on the part of the consumer. Where appropriate, Directive 2008/48/EC should be adapted accordingly.

Amendment 91

5. Powers are delegated to the Commission 5. Powers are delegated to the Commission in accordance with Article 26 and subject in accordance with Article 26 to amend the to the conditions of Articles 27 and 28, to formula used to calculate the annual amend the formula and the assumptions percentage rate of charge as set out in used to calculate the annual percentage rate Annex I. of charge as set out in Annex I. The Commission shall, when adopting The Commission shall, when adopting such delegated acts, amend, where such delegated acts, amend, where necessary, the formula or assumptions laid necessary, the formula laid down in Annex down in Annex I, in particular if the I. assumptions set out in this Article and in Annex I do not suffice to calculate the annual percentage rate of charge in a uniform manner or are not adapted any more to the commercial situation at the market.

Amendment 92

2. However, the parties may agree in the 2. However, the parties may agree in the credit agreement that the information credit agreement that the information referred to in paragraph 1 is to be given to referred to in paragraph 1 is to be given to

PE469.842v03-00 164/227 RR\906034EN.doc EN the consumer periodically in cases where the consumer periodically in cases where the change in the borrowing rate correlates the change in the borrowing rate correlates directly with a change in a reference rate, directly with a change in a reference rate, the new reference rate is made publicly the new reference rate is made publicly available by appropriate means and the available by appropriate means and the information concerning the new reference information concerning the new reference rate is also kept available in the premises rate is also kept available in the premises of the creditor. of the creditor, and communicated personally to the consumer together with the amount of new monthly instalments. The creditor may continue to inform consumers periodically about changes in the borrowing rate, where the borrowing rate does not correlate directly with a change in reference rate, if such provisions were in place prior to the entry into force of this Directive.

Justification

In einigen Mitgliedstaaten können die Verbraucher durch Anzeigen in nationalen Zeitungen über derartige Änderungen des Sollzinssatzes informiert werden. Wenn eine solche Gepflogenheit besteht und in dem betreffenden Mitgliedstaat umfassend anerkannt wird, sollten die Mitgliedstaaten das Recht haben, diese Regelung beizubehalten.

Amendment 93

2a. Where changes in the borrowing rate are determined by way of auction on the capital markets and it is therefore impossible for the creditor to inform the consumer of any change before the change enters into force, the creditor will, in good time before the auction, inform the consumer in writing of the upcoming procedure and the expected level of the new borrowing rate.

Justification

When changes of the borrowing rate are determined by an auction on the capital markets the creditor will not know the exact new rate until the auction has closed and the bonds have been sold.

1. Member States shall ensure that, before 1. Member States shall ensure that, before the conclusion of the credit agreement, a the conclusion of the credit agreement, the thorough assessment of the consumer's creditor assesses the consumer's creditworthiness is conducted by the creditworthiness on the basis of sufficient creditor, based on criteria including the information, where appropriate obtained consumer's income, savings, debts and from the consumer and, where necessary, other financial commitments. That on the basis of a consultation of the assessment shall be carried out on the relevant database. Member States shall basis of the necessary information, ensure that creditors establish appropriate obtained by the creditor or, where processes to assess the creditworthiness of applicable, credit intermediary from the the consumer. These processes shall be consumer and from relevant internal or reviewed at regular intervals and up-to-date external sources and shall respect the records of those processes shall be requirements with regard to necessity and maintained. proportionality set out in Article 6 of Directive 95/46/EC. Member States shall ensure that creditors establish appropriate processes to assess the creditworthiness of the consumer. These processes shall be reviewed at regular intervals and up-to-date records of those processes shall be maintained.

Justification

There is no urgent need to depart here from the provisions of the Consumer Credit Directive, particularly since there are other instruments in this field such as the Capital Adequacy Directive (Directive 2006/49/EC) and the Directive relating to the taking up and pursuit of the business of credit institutions (Directive 2006/48/EC).

Amendment 95

(a) Where the assessment of the deleted consumer’s creditworthiness results in a negative prospect for his ability to repay the credit over the lifetime of the credit agreement, the creditor refuses credit.

(b) Where the credit application is rejected, (b) Where the credit application is rejected, the creditor informs the consumer the creditor informs the consumer immediately and without charge of the immediately and without charge. reasons for rejection.

Justification

Information about the reasons for rejection might lead consumers to modify their application by providing false information.

Amendment 97

Proposal for a directive Article 14 – paragraph 2 – point d

(d) Where the credit application is rejected (d) If the credit application is rejected on on the basis of the data contained, or lack the basis of a database consultation, the thereof, in a database that has been creditor informs the consumer immediately consulted, the creditor informs the and without charge of the result of such consumer immediately and without charge consultation and of the particulars of the of the name of the database that was database consulted. consulted as well as of its controller and of his right to access and, where necessary, his right to rectify his data in that database.

Justification

Amendment 98

Proposal for a directive Article 14 – paragraph 2 – point e

(e) Without prejudice to the general right (e) Without prejudice to the general right of access contained in Article 12 of the of access contained in Article 12 of the Directive 95/46/EC, where the application Directive 95/46/EC, where the application is rejected on the basis of an automated is rejected on the basis of an automated

RR\906034EN.doc 167/227 PE469.842v03-00 EN decision or a decision based on methods decision or a decision based on methods such as automated credit scoring, the such as automated credit scoring, the creditor informs the consumer immediately creditor informs the consumer immediately and without charge and that the creditor and without charge. explains the logic involved in the automated decision to the consumer.

Amendment 99

Proposal for a directive Article 14 – paragraph 2 – point f

(f) The consumer has the opportunity to deleted request for the decision to be reviewed manually.

Justification

The added value of this provision to consumers is unclear.

Amendment 100

3. Member States shall ensure that, where 3. Member States shall ensure that, where the parties consider increases in the total the consumer asks for an increase in the amount of credit extended to the consumer total amount of credit after the conclusion after the conclusion of the credit of the credit agreement, the financial agreement, the financial information at the information at the disposal of the creditor disposal of the creditor concerning the concerning the consumer is updated and consumer is updated and the consumer’s the consumer's creditworthiness re- creditworthiness re-assessed before any assessed before any significant increase in significant increase in the total amount of the amount of credit is granted. credit is granted.

Justification

The total amount of the credit can increase also as a result of varying borrowing rates. It should be made clear that the financial information should be updated only when the consumer asks for an increase in the credit.

4. Further to assessing a consumer’s deleted creditworthiness, Member States shall ensure that creditors and credit intermediaries obtain the necessary information regarding the consumer’s personal and financial situation, his preferences and objectives and consider a sufficiently large number of credit agreements from their product range in order to identify products that are not unsuitable for the consumer given his needs, financial situation and personal circumstances. Such considerations shall be based on information that is up to date at that moment in time and on reasonable assumptions as to the consumer's situation over the term of the proposed credit agreement.

Justification

This paragraph to be deleted for reasons of data protection.

Amendment 102

5. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to specify and amend the criteria to be considered in the conduct of a creditworthiness assessment as laid down in paragraph 1 of this Article and in ensuring that credit products are not unsuitable for the consumer as laid down in paragraph 4 of this Article.

Proposal for a directive Article 15 – paragraphs 1 and 2

1. Member States shall ensure that 1. Member States shall ensure that consumers provide creditors and, where creditors and, where applicable, credit applicable, credit intermediaries with intermediaries request from consumers all complete and correct information on their necessary information on their financial financial situation and personal situation and personal circumstances in the circumstances in the context of the credit context of the credit application process. application process. That information should be supported, when necessary, by documentary evidence from independently verifiable sources. 2. As regards the information to be The creditor or credit intermediary shall provided by the consumer in order for the inform the consumer in good time of what creditor to be able to conduct a thorough information, including independently assessment of the consumer’s verifiable evidence, the consumer is creditworthiness and make a decision on required to provide, and by what time, in whether or not to grant the credit, order for the creditor to conduct the Member States shall ensure that necessary assessment of the consumer’s creditors, at the pre-contractual phase, creditworthiness and take a decision on clearly specify the information, including whether or not to grant the credit. independently verifiable evidence where necessary, that the consumer needs to provide. Member States shall also ensure that creditors state the exact timing by which consumers are required to provide such information. Member States shall ensure that in cases where the consumer chooses not to provide the information necessary for the assessment of his creditworthiness, the creditor or credit intermediary warns the consumer that they are unable to carry out a creditworthiness assessment and therefore that the credit may not be granted. This warning may be provided in a standardised format.

2. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to define uniform credit registration criteria and data processing conditions to be applied to the databases referred to in paragraph 1 of this Article. In particular, such delegated acts shall define the registration thresholds to be applied to such databases and shall provide for agreed definitions for key terms used by such databases.

Amendment 105

1. For the purposes of this Directive, 1. For the purposes of this Directive, 'advice' constitutes a separate service from 'advice' constitutes a separate service from the granting of a credit. Such a service can the granting of a credit. A separate charge only be marketed as advice when the for advice can only be made if the remuneration of the individual providing consumer has been informed of the the service is transparent to the requirement to pay a charge and of consumer. method used for its calculation.

Amendment 106

2. Member States shall ensure that the 2. Member States shall ensure that the creditor or credit intermediary informs the creditor or credit intermediary informs the consumer, in the context of a given consumer, in the context of a given transaction, whether or not advice is being transaction, whether advice will be or will be provided. This may be done provided to him and, if applicable, through additional pre-contractual indicates the fee payable by the consumer

RR\906034EN.doc 171/227 PE469.842v03-00 EN information. Where advice is provided to for the provision of that advice. This may consumers, in addition to the requirements be done through additional pre-contractual set out in Articles 5 and 6, Member States information. Where advice is provided to shall ensure that creditors and credit consumers, in addition to the requirements intermediaries: set out in Articles 5 and 6, Member States shall ensure that creditors and credit intermediaries:

Justification

Clarification of the wording to make a clear distinction between cases where no advice is provided and cases where it is.

Amendment 107

(a) consider a sufficiently large number of (a) disclose to the consumer the range of credit agreements available on the market credit agreements they consider so that the so as to enable the recommendation of the consumer understands the basis of the most suitable credit agreements for the recommendation of suitable credit consumer’s needs, financial situation and agreements for the consumer’s needs, personal circumstances; financial situation and personal circumstances;

Amendment 108

1. Member States shall ensure that the 1. Member States shall ensure that the consumer has a statutory or contractual consumer has a statutory or contractual right to discharge his obligations under a right to discharge fully or partially his credit agreement prior to the expiry of that obligations under a credit agreement prior agreement. In such cases, he shall be to the expiry of that agreement. In such entitled to a reduction in the total cost of cases, he shall be entitled to a reduction in the credit, such a reduction consisting of the total cost of the credit, such a reduction the interest and the costs for the remaining consisting of the interest and the costs for duration of the contract. the remaining duration of the contract.

Justification

Alignment with Article 16(1) of the Consumer Credit Directive. It is important that the consumer has a right to a partial early repayment of the loan.

Member States may provide that the Member States may provide that the exercise of the right referred to in creditor should be entitled to fair paragraph 1 is subject to certain compensation, where justified, for conditions. Such conditions may include potential costs directly linked to early time limitations on the exercise of the repayment of the credit. This right, different treatment depending on compensation should then be calculated the type of the borrowing rate, or using a transparent method laid down restrictions with regard to the prior to the signing of the agreement. circumstances under which the right may be exercised. Member States may also provide that the creditor should be entitled to fair and objectively justified compensation for potential costs directly linked to early repayment of the credit. In any event, if the early repayment falls within a period for which the borrowing rate is fixed, exercise of the right may be made subject to the existence of a special interest on the part of the consumer. The consumer must be clearly informed of the right referred to in paragraph 1 and of the amount of the compensation or the method of calculating it.

Amendment 110

1. Credit intermediaries shall be duly 1. Credit intermediaries shall be duly authorised to carry out the activities set authorised or registered with a competent out in Article 3(3) by a competent authority as defined in Article 4 in their authority as defined in Article 4 in their home Member State to carry out the home Member State. Such authorisation activities set out in Article 3(e). Such shall be granted on the basis of authorisation or registration shall be requirements established in the home granted on the basis of requirements Member State of the credit intermediary established in the home Member State of and shall include the fulfilment of the the credit intermediary and shall include professional requirements laid down in the fulfilment of the requirements laid Article 20. down in Articles 6 and 21. What is later

RR\906034EN.doc 173/227 PE469.842v03-00 EN on provided for regarding authorisation, applies to registration.

Justification

From the point of view of consumer protection the essential thing is that credit intermediaries are obliged to fulfil the requirements laid down in Articles 6 and 21. Whether the procedure is called authorisation or registration should be left to be decided by the Member States depending on their administrative traditions. In this context, it should also be noted that according to Directive 2002/92/EC registration is required from insurance intermediaries.

Amendment 111

3. Powers are delegated to the deleted Commission to adopt and, where necessary amend, regulatory technical standards to stipulate the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b). The regulatory technical standards referred to in subparagraph 1 shall be adopted in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010. EBA shall develop draft regulatory technical standards to stipulate the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b) for submission to the Commission [within 6 months of the adoption of the proposal]. EBA will review, and if necessary, develop draft regulatory technical standards to amend the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b) for submission to the Commission for the first time [4 years after entry into force of the Directive] and biannually thereafter.

Amendment 112

PE469.842v03-00 174/227 RR\906034EN.doc EN Proposal for a directive Article 21 – paragraph 3 a (new)

3a. Member States are entitled to restrict any payments by consumers to creditors and credit intermediaries before the actual conclusion of a credit agreement.

Justification

This is a necessary provision to prevent fraud attempts.

Amendment 113

4. Where the host Member State has clear 4. Where the host Member State has clear and demonstrable grounds for concluding and demonstrable grounds for concluding that a credit intermediary acting within its that a credit intermediary acting within its territory under the freedom to provide territory under the freedom to provide services or through a branch is in breach of services or through a branch is in breach of the obligations set out in this Directive, it the obligations set out in this Directive shall refer those findings to the competent which do not confer powers on the authority of the home Member State which competent authority of the host Member shall take the appropriate measures. In State, it shall refer those findings to the cases where, despite measures taken by the competent authority of the home Member competent authority of the home Member State which shall take the appropriate State, a credit intermediary persists in measures. In cases where, despite measures acting in a manner that is clearly taken by the competent authority of the prejudicial to the interests of host Member home Member State, a credit intermediary State consumers or the orderly functioning persists in acting in a manner that is clearly of markets, the following shall apply: prejudicial to the interests of host Member State consumers or the orderly functioning of markets, the following shall apply:

Justification

Ensures that host Member State competent authorities are able to regulate conduct of business on their territory, given the implications for consumer protection.

1. Without prejudice to procedures for the Member States shall impose sanctions for withdrawal of authorisation or to the infringements of the national provisions right of Member States to impose adopted on the basis of this Directive and criminal sanctions, Member States shall shall take all measures necessary to ensure, in conformity with their national ensure that they are implemented. Those law, that appropriate administrative sanctions shall be effective, proportionate measures can be taken or administrative and dissuasive. sanctions imposed against persons responsible where the provisions adopted in the implementation of this Directive have not been complied with. Member States shall ensure that these measures are effective, proportionate and dissuasive. Member States shall provide for penalties in particular cases where consumers knowingly provide incomplete or incorrect information in order to obtain a positive creditworthiness assessment where the complete and correct information would have resulted in a negative creditworthiness assessment, and are subsequently unable to fulfil the conditions of the agreement, and shall take all measures necessary to ensure that they are implemented.

Justification

Amendment 115

2. Member States shall ensure that the deleted competent authority discloses to the public any measure or sanction that will be imposed for infringement of the

PE469.842v03-00 176/227 RR\906034EN.doc EN provisions adopted in the implementation of this Directive, unless such disclosure would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.

Justification

Compare Article 23 of the Consumer Credit Directive. These measures or sanctions should not seek to ‘name and shame’ anyone.

Amendment 116

1. Member States shall ensure that 1. Member States shall ensure that appropriate and effective complaints and appropriate and effective out-of-court redress procedures are established for the dispute resolution procedures are put in out-of-court settlement of disputes place for the settlement of consumer concerning rights and obligations disputes concerning credit agreements, established under this Directive between using existing bodies where appropriate. creditors and consumers and between credit intermediaries and consumers, using existing bodies where appropriate. Member States shall further ensure that all creditors and credit intermediaries adhere to one or more such bodies implementing such complaint and redress procedures.

Justification

Amendment 117

2. Member States shall ensure that these 2. Member States shall encourage these bodies actively cooperate in the resolution bodies to cooperate so that cross-border of cross-border disputes. disputes concerning credit agreements can also be resolved.

RR\906034EN.doc 177/227 PE469.842v03-00 EN Justification Alignment with Article 24 of the Consumer Credit Directive.

Amendment 118

1. The powers to adopt delegated acts 1. The power to adopt delegated acts shall referred to in Articles 6(4), 8(4), 9(3), be conferred on the Commission subject to 10(3), 14(5) and 16(2) shall be conferred the conditions laid down in this Article. on the Commission for an indeterminate period of time following the entry into force of this Directive. 2. As soon as it adopts a delegated act, the 2. The power to adopt delegated acts Commission shall notify it simultaneously referred to in Article 9(3)(d) and (e) and to the European Parliament and to the Article 12(5) shall be conferred on the Council. Commission for an indeterminate period of time from…*. 3. The power to adopt delegated acts is 3. The delegation of powers referred to in conferred on the Commission subject to Article 9(3)(d) and (e) and Article 12(5) the conditions laid down in Articles 27 may be revoked at any time by the and 28. European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision to revoke in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force. 3a. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council. 3b. A delegated act adopted pursuant to Article 9(3) (d) and (e) and Article 12(5) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and to the Council or if,

PE469.842v03-00 178/227 RR\906034EN.doc EN before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. At the initiative of the European Parliament or the Council that period shall be extended by two months. ______ The date of entry into force of this Directive.

Amendment 119

Article 27 deleted Revocation of the delegation 1. The delegation of powers referred to in Articles 6(4), 8(4), 9(3), 10(3), 14(5) and 16(2) may be revoked at any time by the European Parliament or by the Council. 2. The institution which has commenced an internal procedure for deciding whether to revoke the delegation of powers shall inform the other legislator and the Commission at the latest one month before the final decision is taken, stating the delegated powers which could be subject to revocation and the reasons for any revocation. 3. The decision of revocation shall terminate the delegation of the powers specified in that decision. It shall take effect immediately or at a later date specified therein. It shall not affect the validity of the delegated acts already in force. It shall be published in the Official Journal of the European Union.

Justification Alignment with previous deletions.

Article 28 deleted Objections to delegated acts 1. The European Parliament and the Council may object to a delegated act within a period of two months from the date of notification. At the initiative of the European Parliament or the Council that period shall be extended by one month. 2. Where, on expiry of the period referred to in paragraph 1, neither the European Parliament nor the Council has objected to the delegated act, it shall be published in the Official Journal of the European Union and shall enter into force on the date stated therein. The delegated act may be published in the Official Journal of the European Union and enter into force before the expiry of that period where the European Parliament and the Council have both informed the Commission of their intention not to raise objections. 3. Where either the European Parliament or the Council objects to an adopted delegated act within the period referred to in paragraph 1, it shall not enter into force. The institution which objects shall state the reasons for objecting to the delegated act.

Amendment 121

Proposal for a directive Article 29 – title

Imperative nature of this Directive Harmonisation and imperative nature of this Directive

Compare Article 22 of the Consumer Credit Directive.

Amendment 122

Proposal for a directive Article 29 – paragraph -1 (new)

-1. Insofar as this Directive contains harmonised provisions, Member States may not maintain or introduce in their national law provisions diverging from those laid down in this Directive.

Justification

Amendment 123

3. Member States shall take the necessary 3. Member States shall take the necessary measures to ensure that consumers do not measures to ensure that consumers do not lose the protection granted by this lose the protection granted by this Directive by virtue of the choice of the law Directive by virtue of the choice of the law of a third country as the law applicable to of a third country as the law applicable to the credit agreement. the credit agreement, if the credit agreement has a close link with the territory of one or more Member States.

Justification

Amendment 124

Article 30a Transitional measures

RR\906034EN.doc 181/227 PE469.842v03-00 EN This Directive shall not apply to credit agreements existing on the date when the national implementing measures enter into force.

Justification Alignment with Article 30 of the Consumer Credit Directive.

Amendment 125

(a) an assessment of consumer satisfaction (a) an assessment of compliance with the with the ESIS; ESIS and consumer use, understanding and satisfaction thereof;

Amendment 126

Proposal for a directive Annex I – Section II – letter j

(j) For credit agreements for which a fixed (j) For credit agreements for which a fixed borrowing rate is agreed in relation to the borrowing rate is agreed in relation to the initial period, at the end of which a new initial period, at the end of which a new borrowing rate is determined and borrowing rate is determined and subsequently periodically adjusted subsequently periodically adjusted according to an agreed indicator, the according to an agreed indicator, the calculation of the annual percentage rate calculation of the annual percentage rate shall be based on the assumption that, at shall be based on the assumption that, at the end of the fixed borrowing rate period, the end of the fixed borrowing rate period, the borrowing rate is the same as at the the borrowing rate is the same as at the time of calculating the annual percentage time of calculating the annual percentage rate, based on the value of the agreed rate, based on the value of the agreed indicator at that time. indicator at that time, but is not less than the fixed borrowing rate. For credit agreements with a fixed borrowing rate of at least an initial period of five years and especially where a new fixed rate agreement is planned to proceed the agreement and variable conditions are only agreed on to prepare for the case that a new fixed deal has not yet been agreed on, only the initial fixed borrowing rate is to be taken into

PE469.842v03-00 182/227 RR\906034EN.doc EN account.

Amendment 127

Proposal for a directive Annex II – Part A – ESIS model – introductory part – point 1

This document was produced on [current This document was produced on [current date] in reply to your request for date] in reply to your request for information. This document does not information. This document does not constitute an obligation for us to grant you constitute a legally binding offer or an a loan. obligation for us to grant you a loan.

Justification

It is necessary to make it clear that the ESIS is not a legally binding offer to the consumer.

Amendment 128

Proposal for a directive Annex II – Part A – ESIS model – point 1 – introductory part

1. Lender 1. Lender and (where applicable) the credit intermediary

Justification

As the obligation under Article 9(2) to provide the ESIS also applies to the credit intermediary, the intermediary should therefore be included.

Amendment 129

Proposal for a directive Annex II – Part A – ESIS model – point 1 – indent 6

Supervisory authority: [Name and Web deleted address of supervisory authority]

Justification

This reference has no added value and could lead to confusion, since the creditor already provides information about the internal complaint scheme.

Amendment 130

RR\906034EN.doc 183/227 PE469.842v03-00 EN Proposal for a directive Annex II – Part A – ESIS model – point 1 – indent 7

Contact person: [Full contact details of deleted contact person]

Justification

Including information on the contact person is superfluous as the name of the contact person may change during the repayment of the loan.

Amendment 131

Proposal for a directive Annex II – Part A – ESIS model – point 3

3. Interest rate 3. Interest rate The APRC is the total cost of the loan The APRC is the total cost of the loan expressed as an annual percentage. The expressed as an annual percentage. The APRC is provided to help you to compare APRC is provided to help you to compare different offers. The APRC applicable to different offers. The APRC applicable to your loan is [APRC]. It comprises: your loan is [APRC]. It comprises: Interest rate [value in percentage] Borrowing rate [value in percentage] [Other components of the APRC] [Other components of the APRC]

Amendment 132

Proposal for a directive Annex II – Part A – ESIS model – point 5 – introductory part

5. Amount of each instalment; 5. For repayment loan, amount of each instalment

Justification

Compared to point 9 of the original ESIS regarding the ‘amount of each instalment’, this point does not take account of interest-only mortgages. The ESIS should be capable of coping not only with repayment mortgages, but also interest-only mortgages which are available in certain EU Member States.

Amendment 133

PE469.842v03-00 184/227 RR\906034EN.doc EN Proposal for a directive Annex II – Part A – ESIS model – point 6

6. Illustrative repayment table deleted This table shows the amount to be paid every [frequency]. The instalments (column [relevant no.]) are the sum of interest paid (column [relevant no.]), capital paid (column [relevant no.]) and, where applicable other costs (column [relevant no.]). Where applicable, the costs in the other costs column relate to [list of costs]. Outstanding capital (column [relevant no.]) is the amount of the loan that remains to be reimbursed after each instalment. [Amount and currency of the loan] [Duration of the loan] [Interest rate] [Table] (Where applicable) [Warning on the variability of the instalments]

Justification

Given the large amount of information contained in the illustrative repayment table, it is proposed to move it to the end of the ESIS.

Amendment 134

(Where applicable) You do not have the deleted possibility to repay this loan early.

(Where applicable) The interest rate of this (Where applicable) The interest rate of this loan does not remain fixed during the loan does not remain fixed during the whole duration of the loan. whole duration of the loan. It may increase significantly once the fixed interest rate period has lapsed.

Amendment 136

You will also need to pay other taxes and You will also need to pay other taxes and costs (where applicable), e.g. notary fees. credit protection costs (where applicable), e.g. registration fees, notary fees.

Amendment 137

Proposal for a directive Annex II – Part A – ESIS model – point 14 – indent 8 (new)

Where payments do not give rise to an immediate corresponding amortisation of the total amount of credit, but are used to constitute capital, your attention is drawn to the fact that the credit agreement or supplementary agreement does not provide for a guarantee of repayment of the total amount of credit drawn down under the credit agreement, unless such a guarantee is given.

Amendment 138

Proposal for a directive Annex II – Part A – ESIS model – point 14 a (new)

14a. Illustrative repayment table

PE469.842v03-00 186/227 RR\906034EN.doc EN This table shows the amount to be paid every [frequency]. The instalments (column [relevant no.]) are the sum of interest paid (column [relevant no.]), capital paid (column [relevant no.]) and, where applicable other costs (column [relevant no.]). Where applicable, the costs in the other costs column relate to [list of costs]. Outstanding capital (column [relevant no.]) is the amount of the loan that remains to be reimbursed after each instalment. [Amount and currency of the loan] [Duration of the loan] [Interest rate] [Table] [Warning on the variability of the instalments]

Justification

Given the large amount of information contained in the illustrative repayment table, it is proposed to move it to the end of the ESIS.

Amendment 139

Proposal for a directive Annex II – Part B – introductory part

In completing the ESIS, the following In completing the ESIS, the following instructions shall be followed: instructions shall be followed, and information should be provided in plain, clear language comprehensible to an average consumer:

Justification

The ESIS should be understandable to an average consumer.

Proposal for a directive Annex II – Part B – Section 3 – point 1

(1) In addition to the interest rate, all the (1) In addition to the borrowing rate, all other costs contained in the APRC shall be the other costs contained in the APRC shall listed (name and equivalence in be listed (name and equivalence in percentage). Where providing a percentage percentage). Where providing a percentage rate for each of those costs is not possible rate for each of those costs is not possible or does not make sense, the creditor shall or does not make sense, the creditor shall provide a global percentage rate. provide a global percentage rate. Where a fixed borrowing rate is agreed in relation to the initial period, at the end of which the borrowing rate is adjusted according to an agreed indicator, your attention is drawn to the fact that the borrowing rate and the APRC may significantly exceed the fixed borrowing rate and the original APRC.

Amendment 141

(2) The creditor shall also list each of the (2) The creditor shall also provide a costs by category, indicating their amount, detailed list of costs, to whom they are to to whom they are to be paid and at what be paid and at what moment. Where the moment. Where the amount is not known, amount is not known, the creditor shall the creditor shall provide a possible range provide a possible range or an indication of or an indication of how the amount will be how the amount will be calculated. calculated.

Amendment 142

Proposal for a directive Annex II – Part B – Section 7 – point 2 a (new)

(2a) The creditor shall inform the consumer on his freedom to choose ancillary services from another provider of his choice.

The consumer should be properly informed about his/her freedom to choose the provider of ancillary services.

Amendment 143

(2) Where an exit charge will be applied to (2) Where compensation will be payable in the early repayment, the creditor shall draw respect of the early repayment, the creditor the borrower’s attention to this and indicate shall draw the borrower’s attention to this its amount. In cases where the amount of and indicate its amount. In cases where the the exit charge would depend on different amount of the compensation would depend factors, such as the amount repaid or the on different factors, such as the amount prevailing interest rate at the moment of repaid or the prevailing interest rate at the the early repayment, the creditor shall moment of the early repayment, the indicate how the exit charge will be creditor shall indicate how the calculated. The creditor shall then provide compensation will be calculated. The at least two illustrative examples in order creditor shall then provide at least two to demonstrate to the borrower the level of illustrative examples in order to the exit charge under different possible demonstrate to the borrower the level of scenarios. the compensation under different possible scenarios.

Justification

Alignment with previous amendments.

Amendment 144

Proposal for a directive Annex II a (new)

Annex IIa Minimum competence requirements 1. The minimum competence requirements of creditors’ and credit intermediaries’ staff should include: (a) appropriate knowledge of credit products secured by a mortgage or another comparable security and ancillary services typically offered together with such products;

RR\906034EN.doc 189/227 PE469.842v03-00 EN (b) appropriate knowledge of the law of the Member States in which the product is being sold; (c) appropriate knowledge and understanding of the property purchasing process in the Member State in which the product is being sold; (d) appropriate knowledge of security valuation; (e) appropriate knowledge of organization and functioning of land registers in the Member State in which the collateral is located; (f) appropriate level of financial and economic competency; (g) appropriate knowledge of ethics; (h) ability to assess the consumer’s creditworthiness. 2. The appropriate level of knowledge and competence should be determined on the basis of: (a) recognised qualifications, e.g. diplomas, degrees, professional trainings, competency tests; Alt. (b) professional experience, which may be defined as a minimum number of years working in areas related to the origination, distribution or intermediation of credit products. 3. Member States may differentiate between the level of professional requirements for the staff of creditors, the staff of credit intermediaries and their management.

PE469.842v03-00 190/227 RR\906034EN.doc EN PROCEDURE

Title Credit agreements relating to residential property

References COM(2011)0142 – C7-0085/2011 – 2011/0062(COD)

Committee responsible ECON Date announced in plenary 10.5.2011

Committee(s) asked for opinion(s) IMCO Date announced in plenary 10.5.2011

Associated committee(s) - date 29.9.2011 announced in plenary

Discussed in committee 24.5.2011 12.7.2011 5.10.2011 22.11.2011

Date adopted 25.1.2012

Result of final vote +: 33 –: 3 0: 1

Members present for the final vote Pablo Arias Echeverría, Adam Bielan, Cristian Silviu Buşoi, Jorgo Chatzimarkakis, Sergio Gaetano Cofferati, Lara Comi, Anna Maria Corazza Bildt, Cornelis de Jong, Vicente Miguel Garcés Ramón, Evelyne Gebhardt, Małgorzata Handzlik, Iliana Ivanova, Philippe Juvin, Sandra Kalniete, Eija-Riitta Korhola, Edvard Kožušník, Kurt Lechner, Toine Manders, Hans-Peter Mayer, Phil Prendergast, Mitro Repo, Robert Rochefort, Zuzana Roithová, Heide Rühle, Christel Schaldemose, Andreas Schwab, Róża Gräfin von Thun und Hohenstein, Bernadette Vergnaud, Barbara Weiler

Substitute(s) present for the final vote Mario Borghezio, Frank Engel, Ildikó Gáll-Pelcz, Anna Hedh, Liem Hoang Ngoc, María Irigoyen Pérez, Emma McClarkin, Kyriacos Triantaphyllides

RR\906034EN.doc 191/227 PE469.842v03-00 EN 12.10.2011

OPINION OF THE COMMITTEE ON LEGAL AFFAIRS

for the Committee on Economic and Monetary Affairs

on the proposal for a directive of the European Parliament and of the Council on credit agreements relating to residential property (COM(2011)0142 – C7-0085/2011 – 2011/0062(COD))

Rapporteur: Alexandra Thein

SHORT JUSTIFICATION

Your rapporteur has serious doubts as to whether, as the Commission claims, the proposed directive can be regarded as an effective instrument to address the financial crisis. It is also questionable as to whether an internal market in credit agreements relating to residential immovable property can be established. Initially, consideration should be given to the establishment of an internal market in credit agreements relating to commercial immovable property. The markets for credit agreements relating to residential immovable property are highly local in nature, and consumers first and foremost need local advice. This applies in particular to first-time buyers, for example families who are purchasing their first home and are therefore particularly deserving of protection. Cross-border demand is low. Language barriers are a particular problem; difficulties also arise on account of the substantial differences between the laws of the Member States, in particular in the area of property law, but also in those of bankruptcy and tax law.

The rapporteur therefore has doubts as to whether such detailed rules are required and as to whether the proposed measures can meet the objective set – that of combating the financial crisis.

In addition, there would seem to be considerable scope for revising the Commission proposal. The key criticisms are as follows: - demarcation from and/or duplication of the consumer credit directive: a number of Member States have enacted provisions which go beyond the scope of the consumer credit directive and fall within that of the proposal for a directive under consideration here. For that reason alone, its provisions should depart from those of the consumer credit directive only in cases where the subject matter makes this absolutely essential. Any other approach would create substantial and unjustified red tape. By the same token, consumers should not be bombarded with unnecessary additional information. The European legislator should not interfere too much with existing national administrative structures. It is not clear, for example, why credit intermediaries should be supervised by

PE469.842v03-00 192/227 RR\906034EN.doc EN authorities which are included among the competent authorities in the regulation on the establishment of a European Banking Authority. Delegated acts: The scope of the delegation of legislative powers in the Commission proposal goes well beyond the limits laid down in Article 290 TFEU and should therefore – as in the case of the consumer credit directive – be restricted to the area of the annual percentage rate of charge.

AMENDMENTS

The Committee on Legal Affairs calls on the Committee on Economic and Monetary Affairs, as the committee responsible, to incorporate the following amendments in its report:

Amendment 1

Proposal for a directive Title

Commission proposal Amendment

Directive of the European Parliament and Directive of the European Parliament and of the Council on credit agreements of the Council on credit agreements relating to residential property relating to residential property for consumers

Justification

In keeping with the title of the consumer credit directive, it should be made clear that the directive deals with consumer contracts.

Amendment 2

(2) In accordance with the Treaty, the (2) In accordance with the Treaty, the internal market comprises an area without internal market comprises an area without internal frontiers in which the free internal frontiers in which the free movement of goods and services and the movement of goods and services and the freedom of establishment are ensured. The freedom of establishment are ensured. The development of a more transparent and development of a more transparent and efficient credit market within that area is efficient credit market within the area vital to promote the development of cross- without internal frontiers is vital to border activity and create an internal promote the development of cross-border market in credit agreements relating to activity. There are substantial differences residential immovable property. There are in the laws of the various Member States substantial differences in the laws of the with regard to conduct of business in the

RR\906034EN.doc 193/227 PE469.842v03-00 EN various Member States with regard to granting of credit agreements relating to conduct of business in the granting of residential immovable property and in the credit agreements relating to residential regulation and supervision of credit immovable property and in the regulation intermediaries and non-credit institutions and supervision of credit intermediaries providing credit agreements relating to and non-credit institutions providing credit residential immovable property. Such agreements relating to residential differences create obstacles that restrict the immovable property. Such differences level of cross-border activity on the supply create obstacles that restrict the level of and demand sides, thus reducing cross-border activity on the supply and competition and choice in the market. demand sides, thus reducing competition and choice in the market, raising the cost of lending for providers and even preventing them from doing business.

Justification

The market for credit agreements relating to residential immovable property is highly local in nature. First-time buyers in particular need advice and will seek it locally.

Amendment 3

(3) The financial crisis has shown that deleted irresponsible behaviour by market participants can undermine the foundations of the financial system, leading to a lack of confidence among all parties, in particular consumers, and potentially severe social and economic consequences. Many consumers have lost confidence in the financial sector and borrowers have found their loans increasingly unaffordable, with defaults and forced sales rising. In view of the problems brought to light in the financial crisis and in the context of efforts to ensure an efficient and competitive internal market, the Commission has proposed measures with regard to credit agreements relating to residential immovable property, including a reliable framework on credit intermediation, in the context of delivering responsible and reliable markets for the future and

PE469.842v03-00 194/227 RR\906034EN.doc EN restoring consumer confidence.

Justification

Addressing the financial crisis and preventing future crises is indeed a priority. However, the link with the proposal for a directive under consideration here is far from clear, not least in terms of the time frame (Green Paper 2005, start of the financial crisis late 2008).

Amendment 4

(4) A series of problems in EU mortgage (4) The Commission has identified a series markets associated with irresponsible of problems in EU mortgage markets lending and borrowing at the pre- associated with irresponsible lending and contractual stage and the potential scope borrowing at the pre-contractual stage and for irresponsible behaviour by credit the potential scope for irresponsible intermediaries and non-credit institutions behaviour by credit intermediaries and have been identified. Some problems non-credit institutions. Some problems concerned loans denominated in a foreign concerned loans denominated in a foreign currency which consumers had taken out in currency which consumers had taken out in that currency to take advantage of the that currency to take advantage of the interest rate offered but without having an interest rate offered but without having an adequate understanding of the currency adequate understanding of the currency risk involved. These problems are driven risk involved. These problems are driven by market and regulatory failures as well as by market and regulatory failures as well as other factors such as the general economic other factors such as the general economic climate and low levels of financial literacy. climate and low levels of financial literacy. Other problems include ineffective, The Commission has identified as other inconsistent, or non-existent registration, problems ineffective, inconsistent, or non- authorisation and supervision regimes for existent registration, authorisation and credit intermediaries and non-credit supervision regimes for credit institutions providing credit for residential intermediaries and non-credit institutions immovable property. The problems providing credit for residential immovable identified have potentially significant property. macroeconomic spill-over effects, can lead to consumer detriment, act as economic or legal barriers to cross-border activity and create an unlevel playing field between actors.

(5) In order to facilitate the emergence of a (5) In order to determine the scope for the smoothly functioning internal market with emergence of a smoothly functioning a high level of consumer protection in the internal market with a high level of area of credit agreements relating to consumer protection in the area of credit residential immovable property, a agreements relating to residential harmonised Union framework needs to be immovable property, a harmonised Union established in a number of areas. It is framework could prove useful in a number further necessary to establish harmonised of areas. At the same time, harmonised standards in order to ensure that consumers standards could be established in order to looking for credit agreements relating to ensure that consumers looking for credit residential immovable property are able to agreements relating to residential do so confident in the knowledge that the immovable property are able to do so institutions they interact with act in a confident in the knowledge that the professional and responsible manner. institutions they interact with act in a professional and responsible manner. In that connection, due account should be taken of the highly local nature of the market in credit agreements relating to residential immovable property. In this area in particular, consumers are very much in need of local advice.

Justification

It is important to make clear that the market for credit agreements relating to residential immovable property is highly local in nature. First-time buyers in particular need advice and will seek it locally.

Amendment 6

(9) The objective of this Directive is to (9) The objective of this Directive is to ensure that all credits provided to ensure that all credits provided to consumers benefit from a high level of consumers benefit from a high level of protection. It should therefore apply to protection. It should therefore apply to credits secured by real estate, or credits credits secured by real estate, or credits which are used to purchase a property in which are used to purchase a property in some Member States and to credits for the some Member States and to credits for the renovation of residential property that are renovation of residential property that are

PE469.842v03-00 196/227 RR\906034EN.doc EN not covered by Directive 2008/48/EC of not covered by Directive 2008/48/EC of the European Parliament and of the the European Parliament and of the Council of 23 April 2008 on credit Council of 23 April 2008 on credit agreements for consumers and repealing agreements for consumers and repealing Council Directive 87/102/EEC which lays Council Directive 87/102/EEC which lays down rules at Union level concerning down rules at Union level concerning consumer credit agreements. Furthermore, consumer credit agreements. Furthermore, this Directive should not be applied to this Directive should not be applied to certain types of credit agreements where certain types of credit agreements where the credit is granted by an employer to his the credit is granted by an employer to his employees under certain circumstances, as employees under certain circumstances, as already provided in Directive 2008/48/EC. already provided in Directive 2008/48/EC. Like Directive 2008/48/EC, this Directive should also not apply to start-up loans.

Justification

Start-up loans are granted under national public support programmes and are therefore subject to special requirements and, by their very nature, State supervision.

Amendment 7

(11a) In keeping with Directive 2008/48/EC, for the purposes of this Directive ‘consumer’ should mean a natural person who, in transactions covered by this Directive, is acting for purposes which are outside his trade, business or profession. In that connection, activities which can be equated with the commercial rental of residential immovable property, for instance in cases where the rental of property secures a person’s livelihood, are not covered by the protection afforded by this Directive.

Justification

It should be made clear that persons who purchase items of residential immovable property on a large scale with a view to renting them out and who take out credit for that purpose do not merit the same protection as consumers and should therefore not be covered by the directive.

Proposal for a directive Recital 11 b (new)

(11b) With a view to guaranteeing a high level of comprehensive consumer protection, when granting, intermediating or advising on credit and, where appropriate, ancillary services to consumers, creditors or credit intermediaries should act honestly, fairly and professionally in accordance with the best interests of the consumer.

Justification

This recital is based on Article 5(1) of the Commission proposal. Incorporating a provision of this kind into the operative part of the directive would give rise to serious implementing problems. In the interests of consumers, however, the substance of the provision should be incorporated into a recital.

Amendment 9

(40) In order to take account of (40) In order to take account of developments in the markets for credit developments in the markets for credit relating to residential immovable property, relating to residential immovable property, including the range of products available, including the range of products available, the Commission should be empowered to the Commission should be empowered to adopt delegated acts in accordance with adopt delegated acts in accordance with Article 290 of the Treaty on the Article 290 of the Treaty on the Functioning of the European Union to Functioning of the European Union to amend the content of the standard amend the formula and the assumptions information items to be included in used to calculate the annual percentage rate advertising, the content and format of the of charge. It is of particular importance European Standardised Information that the Commission carry out Sheet (ESIS), the content of the appropriate consultations during its information disclosures by credit preparatory work, including at expert intermediaries, the formula and the level, and give the experts sufficient time assumptions used to calculate the annual to deliver opinions. The Commission, percentage rate of charge and the criteria when preparing and drawing up to be taken into account for the delegated acts, should ensure a assessment of the consumer’s simultaneous, timely and appropriate

PE469.842v03-00 198/227 RR\906034EN.doc EN creditworthiness. transmission of relevant documents to the European Parliament and the Council. In addition it is essential that the Commission should always set a sufficiently long deadline for the entry into force of delegated acts.

Justification

The powers conferred on the Commission under Article 290 TFEU to adopt delegated acts go too far. The recital is reflects the deletions made in the operative part of the text. In addition, the recital has been brought into line with the Common Understanding on delegated acts.

Amendment 10

Does not affect English version.

Justification

It must be made clear that the proposal covers only credit agreements with consumers.

Amendment 11

(b) Credit agreements the purpose of which (b) Credit agreements the purpose of is to acquire or retain property rights in which, at the time they are concluded, is land or in an existing or projected to acquire or retain property rights in land residential building. or in an existing or projected residential building.

Justification

In the interests of legal clarity, it must be specified that the rule governing purpose applies when the credit agreement is concluded.

Proposal for a directive Article 2 – paragraph 2 – point b a (new)

(ba) credit agreements which relate to loans granted to a restricted public under a statutory provision with a general interest purpose, and at lower interest rates than those prevailing on the market or free of interest or on other terms which are more favourable to the consumer than those prevailing on the market and at interest rates not higher than those prevailing on the market.

Justification

In keeping with Article 2(1)(l) of Directive 2008/48/EC, start-up loans must be excluded from the scope of the directive under consideration here.

Amendment 13

Proposal for a directive Article 3 – point m a (new)

(ma) 'Representative example' means an example mentioning all the assumptions used in order to calculate the annual percentage rate of charge and corresponding to the frequency of certain types of credit agreement in a specific market.

Amendment 14

Proposal for a directive Article 3 – point r a (new)

(ra) ‘residential immovable property’ means an item of immovable property intended primarily for residential purposes;

Defining the term ‘residential immovable property’ makes for clarity and legal certainty.

Amendment 15

1. Member States shall designate the 1. Member States shall designate the competent authorities empowered to ensure competent authorities empowered to ensure implementation of this Directive and shall implementation of this Directive and shall ensure that they are granted all the powers ensure that they are granted all the powers necessary for the performance of their necessary for the performance of their duties. duties. If Member States implement provisions of this Directive by means of statutory provisions which, under their national law, are not subject to regulatory supervision, they shall not be required to designate a competent authority and/or grant powers to the authority so designated.

Justification

If Member States implement provisions of the directive by means of statutory provisions which, under their national law, are not subject to regulatory supervision, e.g. by means of civil-law provisions, they should not be required to designate competent authorities.

Amendment 16

Member States shall ensure that the If authorities are to be designated and authorities designated as competent for have powers conferred on them, Member ensuring the implementation of Articles 18, States shall ensure that the authorities 19, 20 and 21 of this Directive are one of designated as competent for ensuring the those competent authorities included in implementation of Articles 18, 19, 20 and Article 4(2) of Regulation (EU) No 21 of this Directive are one of those 1093/2010 establishing a European competent authorities included in Article Supervisory Authority (European Banking 4(2) of Regulation (EU) No 1093/2010 Authority). establishing a European Supervisory Authority (European Banking Authority). By way of derogation, Member States may also designate authorities which are not

RR\906034EN.doc 201/227 PE469.842v03-00 EN yet among the competent authorities included in Article 4(2) of Regulation (EU) No 1093/2010, provided that they ensure that the relevant provisions of that Regulation implementing Articles 18, 19, 20 and 21 of this Directive apply mutatis mutandis.

Justification

The European legislator should not interfere too much with existing national administrative structures. It is not clear, for example, why credit intermediaries should be supervised by authorities which are included among the competent authorities in the regulation on the establishment of a European Banking Authority.

Amendment 17

2. Where there is more than one competent 2. Where there is more than one competent authority on its territory, a Member State authority on its territory, a Member State shall ensure that those authorities shall ensure that those authorities collaborate closely so that they can collaborate. discharge their respective duties effectively.

Justification

The European legislator should not interfere too much with existing national administrative structures. It is not clear, for example, why credit intermediaries should be supervised by authorities which are included among the competent authorities in the regulation on the establishment of a European Banking Authority.

Amendment 18

1. Member States shall require that, when deleted granting, intermediating or advising on credit and, where appropriate, ancillary services to consumers, the creditor or the credit intermediary acts honestly, fairly and professionally in accordance with the best interests of the consumer.

Article 5(1) of the Commission proposal will give rise to serious problems in the areas of implementation and liability. In the interests of consumers, however, the substance should be incorporated into a recital.

Amendment 19

2. Member States shall ensure that the deleted manner in which creditors remunerate their staff and the relevant credit intermediaries and the manner in which credit intermediaries remunerate their staff do not impede compliance with the obligation to act in accordance with the best interests of the consumer, as referred to in paragraph 1.

Justification

The provision is unclear and should be deleted.

Amendment 20

Proposal for a directive Article 6 – paragraph 1 – point (c)

(c) Creditors and credit intermediaries are deleted monitored in order to assess whether the requirements referred to in paragraph 1, points (a) and (b), are complied with on a continuing basis.

Justification

The provision imposes a disproportionate burden on creditors and credit intermediaries and should be deleted.

4. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to specify the requirements provided in paragraph 1 and 2 of this Article, and in particular, the necessary requirements for appropriate knowledge and competence.

Amendment 22

Proposal for a directive Article -7 (new)

Article -7 Information provision free of charge to the consumer Member States shall ensure that, when information is provided to consumers in compliance with the requirements set out in this Directive, such information is provided without charge to the consumer.

Justification

Creditors and credit intermediaries shall not be allowed to charge the consumer for legal obligations they have to fulfil.

Amendment 23

This obligation shall not apply where national legislation requires the indication of the annual percentage rate

PE469.842v03-00 204/227 RR\906034EN.doc EN of charge in advertising concerning credit agreements which does not indicate an interest rate or any figures relating to any cost of credit to the consumer within the meaning of the first subparagraph.

Justification

The derogation laid down in Article 4(1)(2) of the consumer credit directive should also apply here.

Amendment 24

Proposal for a directive Article 8 – paragraph 2 – subparagraph 1 – introductory part

Justification

In line with Article 4(2) of the consumer credit directive.

Amendment 25

Proposal for a directive Article 8 - paragraph 2 - subparagraph 1 - point f

Justification

In line with Article 4(2)(d) of the consumer credit directive.

Amendment 26

In line with Article 4(2)(f) of the consumer credit directive.

Amendment 27

(h) the total amount payable by the (h) if applicable, the total amount payable consumer; by the consumer;

Justification

In line with Article 4(2)(f) of the consumer credit directive.

Amendment 28

(i) a warning, where applicable, deleted concerning the risk of losing the immovable property in the event of non- observance of the commitments linked to the credit agreement when the credit is secured by a mortgage or another comparable security commonly used in a Member State on residential immovable property or secured by a right related to residential immovable property.

Justification

Self-evident facts should not be a mandatory component of the standard information given in adverts, particularly as – depending on the medium – time and space are in short supply.

Amendment 29

4. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of

PE469.842v03-00 206/227 RR\906034EN.doc EN Articles 27 and 28, to further specify the list of standard information items to be included in advertising. In particular, the Commission, when adopting such delegated acts shall amend, where necessary, the list of the standard information items laid down in paragraphs 2(a) to (i) of this Article.

Justification

We are not dealing here with decisions which supplement or amend non-essential elements of the directive, within the meaning of Article 290(1) TFEU. The Commission should not therefore be given powers to adopt delegated acts.

Amendment 30

Proposal for a directive Article 9 – title

Pre-contractual information General and pre-contractual information

Justification

Linguistic clarification: Article 9 does not contain only pre-contractual information.

Amendment 31

(g) an indicative example of the total cost (g) an indicative representative example of of credit for the consumer and annual the total cost of credit for the consumer and percentage rate of charge; annual percentage rate of charge; where the consumer has informed the creditor of one or more components of his preferred credit, such as the duration of the credit agreement and the total amount of credit, the creditor shall take those components into account;

Justification

Clarification; consistency with Article 8(2).

Member States shall ensure that when an Member States shall ensure that when an offer binding on the creditor is provided to offer binding on the creditor is provided to the consumer, it shall be accompanied by the consumer, it shall be accompanied by an ESIS. In such circumstances, Member an ESIS. In such circumstances, Member States shall ensure that the credit States shall ensure that the consumer has agreement cannot be concluded until the sufficient time to compare the offers, consumer has had sufficient time to assess their implications and take compare the offers, assess their an informed decision on whether to accept implications and take an informed decision an offer, regardless of the means of on whether to accept an offer, regardless of conclusion of the contract. If the the means of conclusion of the contract. consumer has a right of withdrawal in respect of the credit agreement, this shall in itself be regarded as providing the consumer with sufficient time to take a decision.

Justification

It is not clear what ‘the credit agreement cannot be concluded’ means. Should this provision have a bearing on whether the agreement is valid or null and void, an issue which is, moreover, a Member State matter according to Recital 7, the result will be considerable legal uncertainty. At all events, consumers, who in any case have a right of withdrawal, should not be granted any further time to make a decision.

Amendment 33

In the case of a credit agreement under which payments made by the consumer do not give rise to an immediate corresponding amortisation of the total amount of credit, but are used to constitute capital during periods and under conditions laid down in the credit agreement or in an ancillary agreement, the creditor shall make additional pre- contractual information available which makes it clear that such credit agreements do not provide for a guarantee of

PE469.842v03-00 208/227 RR\906034EN.doc EN repayment of the total amount of credit drawn down under the credit agreement, unless such a guarantee is given.

Justification

Parallels with Article 5(5) of the consumer credit directive. A provision of this kind is particularly important in order to protect consumers concluding credit agreements relating to residential immovable property.

Amendment 34

3. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to amend the standard information items laid down in paragraph 1 of this Article and the content and format of the ESIS set out in Annex II. In particular, such delegated acts shall, where necessary: (a) amend the list of the standard information items laid down in paragraph 1 of this Article; (b) delete any of the information items laid down Annex II; (c) make additions to the list of information items laid down in Annex II; (d) amend the presentation of the contents of the ESIS as laid down in Annex II; (e) elaborate on the instructions for the completion of the ESIS as laid down in Annex II.

Justification

1a. Member States shall ensure that the fee, if any, payable by the consumer to the credit intermediary for his services is communicated to the creditor by the credit intermediary, for the purpose of calculation of the annual percentage rate of charge.

Justification

In line with Article 21(c) of the consumer credit directive.

Amendment 36

2. Credit intermediaries who are not tied 2. Credit intermediaries who are not tied shall, at the consumer’s request, provide shall provide the consumer with information on the variation in levels of information on the variation in levels of commission payable by the different commission payable by the different creditors providing the credit agreements creditors providing the credit agreements being offered to the consumer. The being offered to the consumer. consumer shall be informed that he has the right to request such information.

Amendment 37

3. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to update the list of information items on credit intermediaries to be provided to the consumer, as laid down in paragraph 1 of this Article.

PE469.842v03-00 210/227 RR\906034EN.doc EN In particular, the Commission, when adopting such delegated acts shall amend, where necessary, the information items laid down in paragraph 1 of this Article.

Justification

Amendment 38

4. In order to ensure uniform conditions deleted of application of paragraph 1 of this Article, powers are conferred on the Commission to determine, where necessary, a standardised format and the presentation of the information items set out in paragraph 1 of this Article.

Justification

Amendment 39

Member States shall ensure that creditors Member States shall ensure that creditors and, where applicable, credit and, where applicable, credit intermediaries provide adequate intermediaries provide adequate explanations to the consumer on the explanations to the consumer, in order to proposed credit agreement(s) and any put the consumer in a position to assess ancillary service(s), in order to place the whether the proposed credit agreement is consumer in a position enabling him to suited to his needs and to his financial assess whether the proposed credit situation, where appropriate by explaining agreements are adapted to his needs and the pre-contractual information to be financial situation. An adequate provided in accordance with Article 9(2), explanation shall include the provision of the essential characteristics of the

RR\906034EN.doc 211/227 PE469.842v03-00 EN personalised information on the products proposed and the specific effects characteristics of the credits on offer, they may have on the consumer, without however formulating any including the consequences of default in recommendation. Creditors and, where payment by the consumer. applicable, credit intermediaries shall accurately assess the level of knowledge and experience with credit of the consumer by any means necessary so as to enable the creditor or the intermediary to determine the level of explanations to be given to the consumer and adjust such explanations accordingly.

Justification

Parallels with Article 5(6) of the consumer credit directive. In addition, the law cannot be used to stipulate how creditors and credit intermediaries should assess whether consumers need further explanations.

Amendment 40

Member States may adapt the manner by which and the extent to which such assistance is given, as well as by whom it is given, to the particular circumstances of the situation in which the credit agreement is offered, the person to whom it is offered and the type of credit offered.

Justification

In line with Article 5(6) of the consumer credit directive.

Amendment 41

Where the opening of an account is The costs of maintaining an account obligatory in order to obtain the credit, the recording both payment transactions and costs of maintaining such an account, the drawdowns, the costs of using a means of costs of using a means of payment for both payment for both payment transactions and payment transactions and drawdowns on drawdowns, and other costs relating to

PE469.842v03-00 212/227 RR\906034EN.doc EN that account, and other costs relating to payment transactions shall be included in payment transactions shall be included in the total cost of credit to the consumer the total cost of credit to the consumer, unless the opening of the account is unless the costs have been clearly and optional and the costs of the account have separately shown in the credit agreement or been clearly and separately shown in the in any other agreement concluded with the credit agreement or in any other agreement consumer. concluded with the consumer.

Justification

Parallels with Article 19(2)(2) of the consumer credit directive.

Amendment 42

5. Powers are delegated to the Commission 5. Powers are delegated to the Commission in accordance with Article 26 and subject in accordance with Article 26 to adopt to the conditions of Articles 27 and 28, to delegated acts concerning the amendment amend the formula and the assumptions of the formula and the assumptions used to used to calculate the annual percentage rate calculate the annual percentage rate of of charge as set out in Annex I. charge as set out in Annex I.

Justification

Modification in line with the Common Understanding on delegated acts.

Amendment 43

1. Member States shall ensure that, before 1. Member States shall ensure that, before the conclusion of the credit agreement, the conclusion of the credit agreement, a thorough assessment of the consumer’s a thorough assessment of the consumer’s creditworthiness is conducted by the creditworthiness is conducted by the creditor, based on criteria including the creditor, based on criteria including the consumer’s income, savings, debts and consumer’s income, assets, debts and other other financial commitments. That financial commitments. That assessment assessment shall be carried out on the basis shall be carried out on the basis of the of the necessary information, obtained by necessary information, obtained by the the creditor or, where applicable, credit creditor or, where applicable, credit intermediary from the consumer and from intermediary from the consumer and from relevant internal or external sources and relevant internal or, where appropriate, shall respect the requirements with regard external sources and shall respect the

RR\906034EN.doc 213/227 PE469.842v03-00 EN to necessity and proportionality set out in requirements with regard to necessity and Article 6 of Directive 95/46/EC. proportionality set out in Article 6 of Member States shall ensure that creditors Directive 95/46/EC. establish appropriate processes to assess the creditworthiness of the consumer. These processes shall be reviewed at regular intervals and up-to-date records of those processes shall be maintained.

Justification

‘Savings’ is too narrow a term and should be replaced by ‘assets’. In addition it is not clear what ‘appropriate processes to assess the creditworthiness of the consumer’ might be. Such processes should not differ too greatly from one Member State to another, however. If the Member States have the right to specify what form those processes should take, then experience shows that they will differ, a result at odds with the purpose of the legislation.

Amendment 44

(a) Where the assessment of the (a) Where the assessment of the consumer’s creditworthiness results in a consumer’s creditworthiness results in a negative prospect for his ability to repay negative prospect for his ability to meet his the credit over the lifetime of the credit debt obligations, the creditor refuses credit. agreement, the creditor refuses credit.

Justification

The proposed wording is too narrow. In the case of credit agreements relating to residential immovable property in particular, it cannot always be assumed that the consumer can repay the credit over the lifetime of the credit agreement. The wording reflects the definition of ‘creditworthiness’ in Article 3(o).

Amendment 45

(b) Where the credit application is (b) Where the granting of credit is denied, rejected, the creditor informs the consumer because the assessment of the consumer’s immediately and without charge of the creditworthiness has resulted in a reasons for rejection. negative prospect for his ability to meet his debt obligations, the creditor informs the consumer immediately and without

PE469.842v03-00 214/227 RR\906034EN.doc EN charge of the reasons.

Justification

The provision is too broad. It should only apply in cases where the assessment of creditworthiness results in a negative prospect.

Amendment 46

4. Further to assessing a consumer’s deleted creditworthiness, Member States shall ensure that creditors and credit intermediaries obtain the necessary information regarding the consumer’s personal and financial situation, his preferences and objectives and consider a sufficiently large number of credit agreements from their product range in order to identify products that are not unsuitable for the consumer given his needs, financial situation and personal circumstances. Such considerations shall be based on information that is up to date at that moment in time and on reasonable assumptions as to the consumer’s situation over the term of the proposed credit agreement.

Justification

This provision is not included in the consumer credit directive, and it imposes a considerable burden on consumers and creditors and credit intermediaries alike. In particular, the consumer should not be required to give details of his personal circumstances if this is not essential for the assessment of his creditworthiness. This provision should be deleted, therefore.

Amendment 47

5. Powers are delegated to the deleted Commission in accordance with Article

RR\906034EN.doc 215/227 PE469.842v03-00 EN 26 and subject to the conditions of Articles 27 and 28, to specify and amend the criteria to be considered in the conduct of a creditworthiness assessment as laid down in paragraph 1 of this Article and in ensuring that credit products are not unsuitable for the consumer as laid down in paragraph 4 of this Article.

Justification

Amendment 48

1. Member States shall ensure that deleted consumers provide creditors and, where applicable, credit intermediaries with complete and correct information on their financial situation and personal circumstances in the context of the credit application process. That information should be supported, when necessary, by documentary evidence from independently verifiable sources.

Justification

The provision is unclear; consumers should not be required to give information which is not essential for the assessment of their creditworthiness. In accordance with general principles, consumers are already required to give full and accurate information.

Amendment 49

1. Each Member State shall ensure non- 1. Each Member State shall ensure non- discriminatory access for all creditors to discriminatory access for all creditors to databases used in that Member State for databases used in that Member State for

PE469.842v03-00 216/227 RR\906034EN.doc EN assessing the creditworthiness of assessing the creditworthiness of consumers and for monitoring consumers to be able to continue to assess consumers’ compliance with the credit it in the event of a consumer's first non- obligations over the life of the credit compliance with the obligation to pay the agreement. Such databases comprise instalments. Such databases comprise databases operated by private credit databases operated by private credit bureaux or credit reference agencies and bureaux or credit reference agencies and public credit registers. public credit registers.

Justification

If consumers comply with their commitments under the credit agreement there is no requirement for ongoing checking and monitoring of their creditworthiness – queries need not be made without a specific reason.

Amendment 50

2. Powers are delegated to the deleted Commission in accordance with Article 26 and subject to the conditions of Articles 27 and 28, to define uniform credit registration criteria and data processing conditions to be applied to the databases referred to in paragraph 1 of this Article. In particular, such delegated acts shall define the registration thresholds to be applied to such databases and shall provide for agreed definitions for key terms used by such databases.

Amendment 51

2. Member States may provide that the 2. Member States may provide that the exercise of the right referred to in exercise of the right referred to in paragraph 1 is subject to certain conditions. paragraph 1 is subject to certain conditions. Such conditions may include time Such conditions may include time limitations on the exercise of the right, limitations on the exercise of the right, different treatment depending on the type different treatment depending on the type

RR\906034EN.doc 217/227 PE469.842v03-00 EN of the borrowing rate, or restrictions with of the borrowing rate, or restrictions with regard to the circumstances under which regard to the circumstances under which the right may be exercised. Member States the right may be exercised. Where a may also provide that the creditor should Member State lays down such conditions, be entitled to fair and objectively justified these shall not make the exercise of the compensation for potential costs directly right referred to in paragraph 1 linked to early repayment of the credit. In excessively difficult or onerous for the any event, if the early repayment falls consumer. within a period for which the borrowing rate is fixed, exercise of the right may be made subject to the existence of a special interest on the part of the consumer. Where a Member State lays down such Member States may also provide that the conditions, these shall not make the creditor should be entitled to fair and exercise of the right referred to in objectively justified compensation for paragraph 1 excessively difficult or potential costs directly linked to early onerous for the consumer. repayment of the credit. In any event, if the early repayment falls within a period for which the borrowing rate is fixed, exercise of the right may be made subject to the existence of a special interest on the part of the consumer.

Justification

The provision of ‘fair and objectively justified compensation for potential costs’ cannot be regarded as making the exercise of their rights by consumers excessively difficult or onerous, as implied by the last subparagraph of the Commission text. Moving this sentence makes it clear that the Member States' discretion does not cover such cases.

Amendment 52

3. Powers are delegated to the deleted Commission to adopt and, where necessary amend, regulatory technical standards to stipulate the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b). The regulatory technical standards referred to in subparagraph 1 shall be adopted in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

PE469.842v03-00 218/227 RR\906034EN.doc EN EBA shall develop draft regulatory technical standards to stipulate the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b) for submission to the Commission [within 6 months of the adoption of the proposal]. EBA will review, and if necessary, develop draft regulatory technical standards to amend the minimum monetary amount of the professional indemnity insurance or comparable guarantee referred to in paragraph 1(b) for submission to the Commission for the first time [4 years after entry into force of the Directive] and biannually thereafter.

Justification

Amendment 53

1. Without prejudice to procedures for the 1. Member States shall lay down the rules withdrawal of authorisation or to the on penalties applicable to infringements right of Member States to impose of the national provisions adopted criminal sanctions, Member States shall pursuant to this Directive and shall take ensure, in conformity with their national all measures necessary to ensure that they law, that appropriate administrative are implemented. Those sanctions shall measures can be taken or administrative be effective, proportionate and dissuasive. sanctions imposed against persons responsible where the provisions adopted in the implementation of this Directive have not been complied with. Member States shall ensure that these measures are effective, proportionate and dissuasive.

Justification

In line with Article 23 of the consumer credit directive.

Member States shall provide for penalties deleted in particular cases where consumers knowingly provide incomplete or incorrect information in order to obtain a positive creditworthiness assessment where the complete and correct information would have resulted in a negative creditworthiness assessment, and are subsequently unable to fulfil the conditions of the agreement, and shall take all measures necessary to ensure that they are implemented. Member States shall take all necessary measures to ensure compliance with this Regulation.

Justification

Amendment 55

1. Member States shall ensure that 1. Member States shall ensure that appropriate and effective complaints and adequate and effective out-of-court redress procedures are established for the dispute resolution procedures for the out-of-court settlement of disputes settlement of consumer disputes concerning rights and obligations concerning credit agreements are put in established under this Directive between place, using existing bodies where creditors and consumers and between appropriate. credit intermediaries and consumers, using existing bodies where appropriate. Member States shall further ensure that all creditors and credit intermediaries adhere to one or more such bodies implementing such complaint and redress procedures.

Amendment 56

2. Member States shall ensure that these 2. Member States shall encourage those bodies actively cooperate in the resolution bodies to cooperate in order to also resolve of cross-border disputes. cross-border disputes concerning credit agreements.

Justification

Amendment 57

1. The powers to adopt delegated acts 1. The power to adopt delegated acts referred to in Articles 6(4), 8(4), 9(3), referred to in Article 12(5) shall be 10(3), 14(5) and 16(2) shall be conferred conferred on the Commission subject to on the Commission for an indeterminate the conditions laid down in this Article. period of time following the entry into force of this Directive. 2. As soon as it adopts a delegated act, the 2. The power referred to in Article 12(5) Commission shall notify it simultaneously shall be conferred on the Commission for to the European Parliament and to the an indeterminate period of time following Council. the entry into force of this Directive. 3. The power to adopt delegated acts is 3. The delegation of power referred to in conferred on the Commission subject to Article 12(5) may be revoked at any time the conditions laid down in Articles 27 by the European Parliament or by the and 28. Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in

RR\906034EN.doc 221/227 PE469.842v03-00 EN force. 3a. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council. 3b. A delegated act adopted pursuant to Article 12(5) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or the Council.

Justification

Changes in line with the deletions concerning delegated acts and the Common Understanding on delegated acts.

Amendment 58

Article 27 deleted Revocation of the delegation 1. The delegation of powers referred to in Articles 6(4), 8(4), 9(3), 10(3), 14(5) and 16(2) may be revoked at any time by the European Parliament or by the Council. 2. The institution which has commenced an internal procedure for deciding whether to revoke the delegation of powers shall inform the other legislator and the Commission at the latest one month before the final decision is taken, stating the delegated powers which could be subject to revocation and the reasons for any revocation. 3. The decision of revocation shall

PE469.842v03-00 222/227 RR\906034EN.doc EN terminate the delegation of the powers specified in that decision. It shall take effect immediately or at a later date specified therein. It shall not affect the validity of the delegated acts already in force. It shall be published in the Official Journal of the European Union.

Justification

Changes in line with the deletions concerning delegated acts and the Common Understanding on delegated acts.

Amendment 59

Article 28 deleted Objections to delegated acts 1. The European Parliament and the Council may object to a delegated act within a period of two months from the date of notification. At the initiative of the European Parliament or the Council that period shall be extended by one month. 2. Where, on expiry of the period referred to in paragraph 1, neither the European Parliament nor the Council has objected to the delegated act, it shall be published in the Official Journal of the European Union and shall enter into force on the date stated therein. The delegated act may be published in the Official Journal of the European Union and enter into force before the expiry of that period where the European Parliament and the Council have both informed the Commission of their intention not to raise objections. 3. Where either the European Parliament or the Council objects to an adopted delegated act within the period referred to in paragraph 1, it shall not enter into force. The institution which objects shall state the reasons for objecting to the

RR\906034EN.doc 223/227 PE469.842v03-00 EN delegated act.

Justification

Modification in line with the Common Understanding on delegated acts.

Amendment 60

Article 30a Transitional measures This Directive shall not apply to credit agreements existing on the date when the national implementing measures enter into force.

Justification

Parallels with Article 30(1) of the consumer credit directive.

Amendment 61

Proposal for a directive Annex I– Section I – point d

Does not apply to English text.

Justification

Does not apply to English text.

Amendment 62

Proposal for a directive Annex II – Part A – Section 'Introductory text' – paragraph 2

This document was produced on the basis This document was produced on the basis of the information that you have provided of the information that you have provided so far and on the current financial market so far and on the current financial market conditions. The information below conditions. This document and the

PE469.842v03-00 224/227 RR\906034EN.doc EN remains valid until [validity date]. After information below remain valid until that date, it may change in line with market [validity date]. After that date, it may conditions. change in line with market conditions. This document is an offer binding/non- binding on the creditor. (Delete as appropriate).

RR\906034EN.doc 225/227 PE469.842v03-00 EN PROCEDURE

Committee(s) asked for opinion(s) JURI Date announced in plenary 10.5.2011

Rapporteur(s) Alexandra Thein Date appointed 24.5.2011

Discussed in committee 21.6.2011 12.7.2011

Members present for the final vote Raffaele Baldassarre, Luigi Berlinguer, Sebastian Valentin Bodu, Françoise Castex, Christian Engström, Marielle Gallo, Lidia Joanna Geringer de Oedenberg, Sajjad Karim, Klaus-Heiner Lehne, Antonio Masip Hidalgo, Jiří Maštálka, Alajos Mészáros, Bernhard Rapkay, Evelyn Regner, Francesco Enrico Speroni, Dimitar Stoyanov, Diana Wallis, Rainer Wieland, Cecilia Wikström, Tadeusz Zwiefka

Substitute(s) present for the final vote Kurt Lechner, Eva Lichtenberger, Toine Manders

Substitute(s) under Rule 187(2) present Giuseppe Gargani for the final vote

PE469.842v03-00 226/227 RR\906034EN.doc EN PROCEDURE

Date submitted to Parliament 31.3.2011

Committee(s) asked for opinion(s) IMCO JURI Date announced in plenary 10.5.2011 10.5.2011

Associated committee(s) IMCO Date announced in plenary 29.9.2011

Rapporteur(s) Antolín Sánchez Date appointed Presedo 21.9.2010

Discussed in committee 13.4.2011 31.8.2011 24.10.2011

Members present for the final vote Elena Băsescu, Sharon Bowles, Udo Bullmann, George Sabin Cutaş, Leonardo Domenici, Derk Jan Eppink, Elisa Ferreira, Ildikó Gáll-Pelcz, Jean-Paul Gauzès, Sven Giegold, Sylvie Goulard, Liem Hoang Ngoc, Gunnar Hökmark, Philippe Lamberts, Werner Langen, Astrid Lulling, Arlene McCarthy, Alfredo Pallone, Antolín Sánchez Presedo, Olle Schmidt, Edward Scicluna, Peter Simon, Theodor Dumitru Stolojan, Sampo Terho, Marianne Thyssen, Corien Wortmann-Kool, Pablo Zalba Bidegain

Substitute(s) present for the final vote David Casa, Philippe De Backer, Vicky Ford, Robert Goebbels, Olle Ludvigsson, Marisa Matias, Mario Mauro, Gianni Pittella, Andreas Schwab, Theodoros Skylakakis, Emilie Turunen

Date tabled 20.6.2012

RR\906034EN.doc 227/227 PE469.842v03-00 EN